During the first two weeks of April, President Trump’s on and off tariff war reframed global trade, sending U.S. markets, in stocks and particularly bonds, on a roller coast ride with an unknown conclusion. There are now questions about the dollar’s role as tariffs on imported cars and car parts, along with everything from China, has many businesses on edge.
Amidst this, financial planners in the Granite State have unequivocal advice: stay focused on your long-term investment plan and don’t over-react to short-term drops in the market.
“Don’t make changes during a tumultuous market environment,” says Ryan Callaghan, partner and chief investment officer at Harbor Group, a financial advising firm in Bedford.
Four financial advisors who spoke with Business NH Magazine all shared the same advice: hold steady. They point to the market’s historic performance as evidence. While the market frequently has short-term dips, it generates an average of 6.37% annual return (when adjusted for inflation), according to analysis by Investopedia and New York University’s Stern School of Business. For most investors, especially those who are not yet retired, that long-term growth pattern outweighs short-term economic stressors, they say.
“Part of being an investor is paying the price of admission, which is volatility and uncertainty,” says Julie Fortin, partner at Northstar Financial Planning in Windham. “With a portfolio invested for the long term, that price of admission earns you the rewards and returns over time.”
Unprecedented? Not Quite.
Market contractions are a normal and healthy part of the lifecycle of the economy, says Robert Walczak, owner of Granite State Wealth Management in Londonderry.
“A lot of times people say it’s unprecedented, but it’s never unprecedented,” he says. “I’ve seen this movie many times before, and the investors who can hold on for the ride are always rewarded.”
Short-term changes to the market within a given year have historically been “all over the place,” Fortin says. Even with those, the overall performance of the market trended upward.
“I don’t think what we’re seeing and hearing is unprecedented,” Fortin says. “It always just feels, in the moment, like this time is different, but it usually isn’t.”
Bob Maloney, owner of Squam Lakes Financial Advisors in Holderness anticipates that the markets “might stumble for a year or two, maybe three.” Still, he
isn’t worried. “The market always comes back. It’s done it for the past 80 years. There are scary points… but it always comes back,” he says.
What To Do if You’re Losing Sleep
The market had a strong run over the past few years, which means that some investors aren’t used to the discomfort of dealing with a down market. If you’re stressed, stop checking your accounts frequently, advisors say, and avoid consuming too many headlines.
When you’re bombarded by bad news about the market, you can lose sight of your long-term goals and be tempted to make reactionary, emotionally driven changes to your investment strategy. Sometimes, just acknowledging that is helpful.
“With so much change happening in your portfolio and the economy, it’s natural to feel like action is needed,” Fortin says. “It’s completely natural to feel anxious when headlines are dominating your feed that feel really scary.”
If you step back and still feel uncomfortable with your level of risk, consider making long-term changes toward a more conservative portfolio in the future. Don’t do it now, or you’ll solidify any losses.
“Now isn’t really the time to act on that but make a mental note that this is how I reacted, and maybe this is too much volatility or risk,” Fortin says.
Evaluate Your Financial Puzzle
Although you can’t control the markets, you can control other pieces of your own financial wellbeing, so this may be a great time to evaluate other areas of your finances, including cash savings in a high-yield savings account. That’s especially important when uncertainty about investments is high, experts say. “Without this cushion, we may find ourselves reacting emotionally to market headlines—selling investments in a downturn, thereby locking in losses,” Fortin says. “Emotional reactions during periods of volatility can derail long-term success.”
One of the key questions is: “How much cash do you need available at all times to feel comfortable?” Maloney says.
For business owners, that’s particularly important. “A healthy cash reserve is the crux of this,” Fortin says. “You have so much invested in your business, making sure that cash flow is healthy at all times can help you withstand periods of uncertainty.”
Business owners should review cash flow, debt and expenses during uncertain times, the advisors say. Consider how your industry might be impacted by tariffs or a down economy. Don’t forget succession planning and how the business would fare if something happened to you as the owner, or other key individuals.
Balancing Risk Tolerance
The key to weathering down markets is having a well-balanced portfolio that accounts for your own personal risk tolerance and your timeline until you want to draw upon investments, advisors say. “As long-term investors, we prioritize preparation over prediction,” Callaghan says.
Ideally, people have crafted a well-balanced portfolio before economic uncertainties. In that case, they shouldn’t make any changes in response to the economy this year.
“We’ve proactively prepared for when things aren’t going great,” says Walczak. “That’s the beauty of putting together a plan with a professional, that we’ve already gotten ahead of this.”
If you haven’t worked with a professional, reach out, he adds. “It’s like planting a tree,” he says. “The best time to do it was 20 years ago, but the next best option is right now.”
If your portfolio is down right now, remember that it still has decades to recover and grow. That’s true even if you’re approaching retirement, since people are living longer, experts say. “A temporary decline in asset value does not equate to a realized loss,” Fortin says.
In the event that the market dip reaches 20%, Callaghan says that he’ll work with clients to rebalance their portfolios back to the long-term goals. That’s more about sticking to the set plan, he emphasizes, rather than changing in response to the market.
Maloney mostly works with people of retirement age who need to be more conservative in their investments. He helps them craft portfolios that are designed to maintain roughly a 4% return via dividends and interest. “It’s given me a significant level of comfort knowing even if the market fails, [my clients are] comfortable because they continue to get the same income,” he says.
Consider This an Opportunity
There can be an upside to a down market for some people. “It’s a great opportunity for those people who are still
accumulating” wealth, says Fortin. Consider increasing your contribution to retirement investments, if that fits into your overall financial plan, she says.
“It feels counterintuitive, but this is the time to buy more stocks,” Walczak says, noting that a balanced portfolio is faring alright this year even as the U.S. stock market plummeted. “Hope is not lost,” he adds.
