Thrifty Thinking: Long-Term Investing During Times of Uncertainty

Investors with longer investment horizons are often told to “stay the course,” but this can be difficult because any long-term period is made up of several short-term periods. At present, stock prices are high and fixed income yields are climbing, putting downward pressure on bond prices. With fresh uncertainty around Fed leadership and the potential for a trade war, volatility has reappeared in what recently had been a historically docile market. Is the best course of action to attempt to avoid large downturns (losses), even if it means giving up some upside (gains) along the way?

In Ronald Blue Trust’s latest Economic Review & Outlook (http://www.ronblue.com/Portals/0/Economic-Review-and-Outlook-Q2-2018.pdf) , the company offers steps on how to approach investing for the long term, particularly during times of heightened fear or uncertainty; interviews are available:

• Step One: Determine when you will need to use the money. Understanding when you need to be able to use your money is the most important factor in determining how to invest. In fact, the primary determinant of whether stocks are appropriate given today’s valuations and volatility is time horizon, not speculation or prediction.
• Step Two: Invest accordingly and integrate valuation and growth. Certain timeless principles guide how the economy works. A country’s or region’s productivity leads to better stock market returns and higher economic growth in those areas. At the same time, paying less for a given level of future growth is preferable.
• Step Three: Don’t let fear or greed drive you away from the process. Our emotions can wreak havoc on an investment portfolio if decisions are made based on them. The final step is to ensure that a disciplined process is truly followed.

Ronald Blue Trust (www.ronblue.com) is a division of Thrivent Trust Company, which is a wholly owned subsidiary of Thrivent Financial (www.thrivent.com). Ronald Blue Trust serves individuals and families across generations with complex financial needs and helps them to enjoy a healthier relationship with money and be inspired to live more generously. With 13 offices, the company serves clients across the wealth spectrum in all 50 states. The company has four divisions (Private Wealth, Family Office, Professional Athlete, Everyday Steward) and over $7 billion in assets under management.