3 Shrewd Maneuvers in a Down Market

Mary E. Flanigan, CFP®

August 24, 2023

Asset Allocation refers to the diversification of an investment portfolio in order to manage overall risk. Often, an investor will divide his or her money among different asset classes such as stocks, bonds, and cash alternatives. There are two important factors that should be considered when deciding the appropriate mix: time and risk tolerance. To read further on this topic, read the short article linked below.

Article Link: Asset Allocation

Now, regarding some possible tactics for maneuvering a market downturn:

It’s natural to think “defense” during a bearish market season. But why not mix in some “offense” with your defense? Here are three moves we can discuss together that may be helpful during the current market downturn.

Invest Your Excess Cash: If you have excess cash earmarked for a long-term goal (retirement or college, for example), a downturn may present an opportunity. Over the last three years, the Standard & Poor’s 500 compounded annual growth rate was 9%. Even with all the pandemic-related volatility, that’s still shy of its historical average.¹
Consider Series I Savings Bonds: With inflation at 40-year highs, you might consider some fresh ideas for investing. I Bonds pay a rate of return plus inflation protection and are backed by the U.S. government. You can visit TreasuryDirect.gov to open a free account (as always, reach out if you have any questions).
Take a Look at Taxes: Each year, taxpayers can deduct up to $3,000 in realized losses. If your losses exceed $3,000, you may be able to carry them forward into future years. Make sure to speak with your tax professional before making any decisions.

I’m confident we’ll see a brighter economic picture before too long. In the meantime, it’s a shrewd move to find ways to better your position, and I’m always available to help you think it through.

^{1. Yahoo Finance showed the S&P 500 at 3020.97 on June 24, 2019, and 3,911.74 on June 24, 2022. Past performance does not guarantee future results, individuals can’t invest directly in an index, and the return and principal value of stock prices will fluctuate.}