Investment advice for 2022 – Business Insider | Vette Leader

  • Experts believe that interest rates and inflation will play a major role in the markets this year.
  • Investors should ensure that their portfolios are consistent with their investment objectives and risk tolerance.
  • Consider creating an investment plan and using limit orders to execute that plan.
  • Read more stories from Personal Finance Insider.

Every year brings new challenges and economic conditions for investors. In recent years, millions of first-time investors have entered the stock market with the help of apps that offer no trading fees, access to cryptocurrencies and fractional shares.

Although no one has a crystal ball to predict what will happen in 2022, it is safe to say that this year will be different. We interviewed 5 experts to get their take on the top things you need to know this year.

Chelsea Ransom-Cooper, CFP®

Investment Expert: Chelsea Ransom-Cooper, CFP

Courtesy of Chelsea Ransom-Cooper, CFP

Advice: Now is the perfect time to reconsider your risk appetite.

This year, be sure to carefully review your relationship to your investments and your desired level of risk. “Investing in riskier assets could hurt your portfolio returns as the Fed tightens monetary policy throughout the year,” said Chelsea Ransom-Cooper, CFP® expert and managing partner at Zenith Wealth Partners.

Many experts expect the Fed to raise interest rates three to four times this year. Historically, a rise in interest rates makes bonds, savings accounts, real estate, and other fixed income investments more attractive, and investors tend to respond by selling riskier stocks and moving more into these areas of the market.

“The market — as well as investors — is reconsidering valuations for high-growth tech stocks as they aim to see higher forecasts and yields to justify it,” says Ransom-Cooper. It is important to avoid emotional investment decisions. A better approach is to base your investment decisions on the initial plans you have made and double-check them with a financial planner.

Chester Spatt, Ph.D.

Investment Expert: Chester Spatt, PhD

Courtesy of Chester Spatt, Ph.D.

Advice: Consider investments that offset the risks of inflation and rising interest rates.

The stock market is still grappling with the effects of the coronavirus, this time in the form of inflation and interest rates. “Two of the biggest risks investors face in 2022 are the ongoing risks and challenges posed by uncertainty about the impact of COVID on the economy and the uncertain impact of expected Federal Reserve rate hikes,” said Chester Spatt , Professor of Finance at Carnegie Mellon University’s Tepper School of Business.

Given these risk factors, investments like inflation-linked bonds (aka I-bonds) could play a bigger role for many investors this year.

Tara Falcone, CFA, CFP®

Investment Expert: Tara Falcone, CFA, CFP®

Courtesy of Tara Falcone, CFA, CFP®

Advice: Shut out the noise by creating an investment plan and sticking to it.

In 2022, with the proliferation of investment apps and social media platforms, it will become even more important to focus on your investment strategy and goals. “Investors should be more conscious about their investments by setting a goal or purpose for each holding in their portfolio,” said Tara Falcone, CFA, CFP® expert and founder of new goals-first investing app Reason. “It’s easy to lose focus and spread your investable money thinly across platforms with no underlying reason or thesis behind your transactions. Investors should know why they are buying something with their hard-earned money and what they expect from it.” Falcone adds.

Creating an investment plan with clear entry and exit points is an essential part of being a disciplined investor and a skill that can continue for years to come. This can be done through the use of limit orders that automatically buy or sell an asset at a price of your choosing. This investment approach can reduce panic trades during periods of high volatility.

Dominique Henderson, CFP®

Investment Expert: Dominique Henderson, CFP®

Courtesy of Dominique Henderson, CFP®

Advice:Don’t let past investment success inspire too much confidence in current market conditions.

In a 2004 letter to shareholders, legendary investor Warren Buffett was quoted as saying, “Be fearful when others are greedy, and be greedy only when others are fearful.” investors get expensive.

“I’m concerned that with the recent ‘things can only go up’ market euphoria, many people who should be more conservative or seek professional help will take unnecessary risks,” said Dominique Henderson, CFP® expert and founder of DJH Kapitalverwaltung.

You can offset some of the unnecessary risk by putting what matters most at the heart of your retirement strategy. “[Those things] can’t usually be quantified unless you sit down and really think about what’s important to you or what you want your money to do for you,” says Henderson.

5. Sabine Smailhodzic LewisCFP®

Investment Expert: Sabina Smailhodzic Lewis, CFP

Courtesy of Sabina Smailhodzic Lewis, CFP

Advice: Protect your portfolio by making sure your portfolio is properly balanced.

Investors should consider rebalancing their portfolios in 2022 and all years, says Sabina Smailhodzic Lewis, CFP® Professional and co-owner of Avant-Garde Wealth in Bowling Green, Kentucky.

“This means that the current asset allocation is adjusted back to the target asset allocation if it changes due to market fluctuations during the year,” she adds.

Rebalancing your portfolio adjusts the weighting of stocks, bonds, and other assets in line with your financial goals. If left unadjusted, especially over long periods of time, there could be significant risks to your financial future.

For example, stocks tend to outperform more conservative investments like bonds historically. Over time, stocks will grow and, over time, make up the bulk of your portfolio. “This is a major risk for investors because they are inappropriate for equity exposure in excess of their target asset allocation and may have undesirable – and potentially negative – consequences due to the higher overall risk,” says Lewis. Regularly rebalancing your portfolio can help mitigate this risk and ensure your investments meet your financial needs.

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