The market downturn is not a huge surprise after the long high we’ve enjoyed, but add the rising cost of goods and services, otherwise known as inflation, and what do we have? Regardless of how it feels, we have an opportunity.
This up and down activity is normal market volatility. It may be disconcerting at times, but it does have an upside. It actually provides an opportunity to buy more investments at discounted prices (or think of it as equities on sale). The double benefit of today’s economic situation is that equities are cheaper to buy now, and secondly, we expect inflation rates to revert to a more normal rate eventually.
“The market drop, even with inflation, still has a silver lining.”
Those two events together can allow our investments to increase in TRUE value down the road, which translates into an increase in purchasing power. Remember that a downturn is not a risk to your overall portfolio or financial well-being unless you try to correct for the dip and lock in losses by removing or liquidating funds.
People who are most negatively impacted by inflation have fixed-income investments with rates of return lower than the inflation rate. Many economists believe that inflation has never diminished the value of a long-term equity investor’s portfolio.
So, don’t hesitate to call us if you have concerns or think a change in strategy may be appropriate. We would love to help you find ways to take advantage of the sale on equities and benefit from the downturn.