How to Create WEALTH

Use these 13 fundamentals of financial security to help unlock a rewarding future.

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Investing: Keep Calm in Rough Seas

The financial markets in 2022 provide a vivid reminder of why good investing hygiene is important all the time. Investors are grappling with a host of market scourges at once—Russia’s invasion of Ukraine, a spike in inflation, rising interest rates and the remnants of a global pandemic. In late February, the broad stock market, as measured by the S&P 500 index, fell into correction territory (typically defined as a drop of 10% to 20%) for the first time since 2020, and losses could escalate. But a well-maintained portfolio should weather such storms over the long haul, especially if you remain patient while also taking advantage of the opportunities that the market offers.

You should not change your game plan because stocks have started to wobble—and that advice applies both to exiting the market in fear and to rushing to buy every dip. Your asset allocation should be appropriate to your age and your risk tolerance in terms of what your financial situation can reasonably bear and what allows you to sleep at night. For example, a fully invested, aggressive investor with more than a decade to invest might allocate 85% to stocks and 15% to bonds. A conservative investor or one with a short time to invest might target 70% in bonds and 30% in stocks, with a preference for dividend-paying stocks.