If I had to sum up the world of retirement investing over the last couple of years in one word, it would be uncertainty. As we face at least another year of unpredictability, many investors are unsure about planning for retirement in a volatile investment environment. A global pandemic, supply chain disruptions, inflation, and a war in Ukraine are just a few challenges facing retirement investors.
However, creating sustainable investment income in an uncertain world is challenging but possible. Finding the right balance of investments, investing in unconventional industries and products, and working with a financial advisor can help you stay on top of ever-changing financial markets and ensure your financial security. Here are some tips and tricks for creating and maintaining financial security in uncertain financial markets.
Get The Right Advice
As anyone who has ever attempted the intimidating task of investing on their own knows, it can be tough to choose suitable investments even in the most stable of times. In times of global economic uncertainty, it is particularly critical to seek out the right advice as you plan for retirement. Choosing the right advisor — one focused on sustainability and predictability and who understands your particular financial concerns — can significantly impact your financial and personal goals for retirement and wealth management.
As you evaluate your options for financial planning, make sure you’re asking the right questions and selecting an advisor who understands and prioritizes your concerns. Seek an advisor who has a fiduciary obligation to put your interests first. An advisor with the right experience can be an essential partner as you seek to navigate the choppy waters of an uncertain financial ocean.
Consider Taking Shelter In Value Stocks
Value stocks trade at a relatively low price given their fundamentals, including dividends, earnings, or revenue. They tend to be larger, more stable companies. These stocks tend to hold their value relatively steadily, even during volatile markets, compared with growth stocks.
In uncertain times, value stocks can be an excellent place for investors to wait out storms in the larger market while still anticipating growth, albeit slower than growth stocks or funds. Especially for those nearing retirement age, funds and products that focus on value stocks can be a great way to create sustainable growth that is less subject to variability in the larger economy.
Back To Basics — Consider Investment In Real Products
In times of global economic uncertainty, investing in industries that produce actual products for which there is relatively constant demand — products like food, natural resources, and real estate — can be a great way to create growth even in erratic times. As an example, the tragic war in Ukraine and subsequent stringent sanctions against Russia have exacerbated the COVID-related interruptions in the global food supply chain (with Russia and Ukraine supplying more than a quarter of the world’s wheat), creating value for food production companies that have been static over time. Similarly, natural resources such as oil and gas and certain metals have increased in value due to political and economic sanctions against Russian producers and investors. Likewise, real estate, which tends to grow over time, is an industry in which demand has outstripped supply, for the most part, making it an attractive investment in a volatile world.
Understanding how these investments are likely to behave over the short, medium, and long term is critical for investors looking to create lasting value and relative stability. Speaking with a financial advisor is essential in this process, as even some “real products” sectors can still experience volatility.
Find Sustainable Growth With ESG Investments
ESG investments are, to some degree, investments that are specifically designed to withstand uncertainty and volatility. Also known as sustainable or socially responsible investing, ESG investing includes consideration of non-financial sustainability factors, allowing investors to choose products that promote social responsibility and good fundamental practices. An investment’s ESG rating or score analyzes a company’s resilience in long-term environmental, social, and governance risks.
In addition to allowing investors to invest in companies and products that reflect their values, these investments are specifically designed to resist overall market variability. Companies that are well-governed and environmentally responsible are most resilient in the face of general economic challenges and provide a robust option for investors looking to create sustainable income over the long term.
In particular, in a world of unstable energy supply and ever-increasing sanctions against Russian oil and gas, ESG products, which are comprised of companies that prioritize environmental sustainability and their carbon footprint, become ever more valuable as the cost of energy increases. As the world changes, these priorities are likely to become more valued by investors, leading to sustainable growth over time.
As with all investments, it’s essential to seek advice about which ESG investments will most likely lead to sustainable growth. As more companies claim the ESG label, an advisor can help you cut through the noise and find investments to help you meet your goals.
Ready To Take The First Step In Preparing For Your Financial Future? Let’s Talk.
Investors looking to build portfolios that reflect their ethics struggle to find accurate information. Sorting through all of that information can be difficult. At Sustainable Retirement Income, we help individuals of all financial conditions get ready to meet their financial goals. Our core services are comprehensive planning, tailored solutions, best-in-class portfolio management, and premium service. Our client’s needs and the solutions we provide are across the financial services spectrum: growth of capital, capital preservation, income, college funding, retirement planning, estate planning, risk management, philanthropic giving, etc.
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