The market has not been our friend in 2022. Now is the time to revisit basic concepts to better position yourself for 2023.


2022 has been a turbulent year, to say the least. Inflation and increases in the interest rate have caused
many Americans to feel financially strained. Also, losses in the stock market have left many, and possibly
you, pondering their investments and questioning their retirement outlook. Losses can be a hard pill to
swallow, but know you are not alone. With 2023 upon us, many people are wondering how they can stay
involved in the market but better protect themselves from the associated risks. The answer is quite simple:
revisit basic investing principles and apply them. These basic principles often serve as the building blocks
of wealth.

Long Term Investing: For your long term investment goals, timing the market is a fool’s game. No one
knows when markets will fall or grow. What we do know is that some of the biggest market gains have
happened right after stocks have fallen. And missing out on those gains can cost you. Over the last 20
years, a person missing the best 10 days in the market would have a portfolio worth over 50% less than a
fully invested account in that period (K. McKenna, Forbes). That equates to an additional 4.2% return
per year if the investor had not exited their positions. Our best friend when it comes to investing is time,
and thus, having a long-term outlook can help manage the short-term volatility that comes along with

Have a Strategy: Investing without a plan is like driving a car without a destination in mind. If you start
investing without a strategy, you may quickly find yourself taking on a lot of risk and incurring losses as
well. Begin by determining what is it that you want to achieve. This can mean a variety of things such as
eliminating debt, saving for college, or funding retirement. You will then want to figure how much it will
cost to achieve your goals. An adviser takes your goals and risk tolerance and designs a strategy that suits
your needs. It is then up to you to stick to the plan, be patient, and see your portfolio reap the

Risk & Reward: All investments carry some form of risk, so knowing your risk tolerance is imperative.
Do note that taking on more risk does not guarantee a higher return, but a person hopes to get paid
for taking on additional risk. Thus, coming up with a risk level that you are comfortable with can be hard,
but an essential first step in determining suitable investment options. Factors such as attitudes, values, and
beliefs on money can influence a person’s ideal risk tolerance.

Diversification: As the timeless saying goes, “Don’t put all your eggs in one basket.” The use of
diversification leads to a more protected portfolio and one that can withstand volatile markets. You don’t
want to have all your assets correlated or in the same basket because when the market inevitably falls,
your losses could be more significant. By diversifying, an investor may have various assets grow while
others decline, leading to a more stable and sustainable portfolio in the end. Diversifying can be further
helped by adjusting your asset allocation periodically. Asset allocation is how someone’s assets are
invested among different asset classes which usually changes with time. In your early years, you may be
comfortable with taking on more risk to increase your earning potential. But as you approach retirement,
you may want to shift your portfolio to the more conservative side to avoid major losses. You adjust your
asset allocation to achieve this and greater diversify your portfolio through your investing lifetime.

Monitoring and Rebalancing: Once your goal has been established and your investment options
decided, you may think you are all set. This item may be true, but your account will still need ongoing
monitoring and rebalancing. This is routinely done by your adviser on a consistent basis but can also be
done by an individual investor. It is recommended an investor take a look at their accounts at least once a
year, but a more frequent checkup, such as on a quarterly basis, can be even better. In doing so, you may
be able take advantage of certain tools. One of those tools is tax loss harvesting. In a down market, an
investor can incur losses on their investments. What tax loss harvesting does is book the losses on the
investments and reinvests them into an equivalent asset. This can only be done if you keep an eye on your
accounts for any losses, even in a bull market!