5 Ways To Navigate Today’s Investing Challenges

By Due
Published on

Pandemic repercussions, a war in Europe, disrupted supply chains, the Great Resignation, rampant inflation, and a potential recession — there are many things threatening the ability to invest at the moment. With so many uncontrollable challenges, many investors are unsure how to proceed without putting their wealth at even greater risk in an uncertain future.

If you’re amongst those who are fortunate enough to not just be making ends meet but also have enough of a surplus to invest, you may be wondering how to proceed.

Get The Full Henry Singleton Series in PDF

Get the entire 4-part series on Henry Singleton in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues

Q3 2022 hedge fund letters, conferences and more


Find A Qualified Financial Advisor

Finding a qualified financial advisor doesn't have to be hard. SmartAsset's free tool matches you with up to 3 fiduciary financial advisors in your area in 5 minutes.

Each advisor has been vetted by SmartAsset and is held to a fiduciary standard to act in your best interests.

If you're ready to be matched with local advisors that can help you achieve your financial goals, get started now.

Here are a few suggestions to navigate today’s investing challenges. Some are general in nature, others are more specific. All of them can help in the days ahead, no matter what situation you might find yourself in.

1. Start by Defining (or Redefining) Your Goals

It’s difficult to find financial success if you don’t define what “success” means in the first place. This shouldn’t just be a generic clarification, either. Planning to “make a lot of money” or “be wildly successful” is fun, but it’s also open-ended. What does that mean? What do you need to accomplish to say that you’ve found success?

If you don’t define wealth for yourself, it will consume you. You will struggle to know when you have enough, and it will be hard to maintain balance within your life.

This is important with so many things working against investors at the moment. If all you’re trying to do is set a vague goal of “making money,” and that’s it — you’re going to spend a lot of nights lying awake in bed or fretting through the days, wondering if you fulfilled the vague definition of “I’ve done enough” as an investor.

Instead, look for ways to establish clear-cut goals. Financial guru Rachel Cruze defines a financial goal as “any plan you have for your money.” It’s as simple as that. You don’t need to create spreadsheets and budgets to create financial goals. Instead, you need to take the all-important step of specifically defining them.

Your goals can be both short-term and long-term in nature. You can even have defined short-term goals that help you achieve long-term goals. Whether it’s purchasing a certain stock, owning your first rental, or reaching a net wealth of $1 million dollars, make sure your financial goals are clear. When that’s the case, they can serve as your North Star as you navigate today’s seemingly endless stream of investing challenges.

2. Create Strategic Support Systems

You may be the one who makes the final decision about where your money is allocated. However, that doesn’t mean you have to operate alone. On the contrary, it’s always a good idea to have the right people speaking in your life. These people could help you maintain (and, at times, modify) your investment behaviors.

This doesn’t just mean finding a good financial expert to manage your 401(k) or working with a financial advisor. You also want to associate yourself with people who can reinforce the right kind of thinking, behavior, and emotional reasoning (more on that last one further down) that set you up for success in every situation.

LifestyleInvestor, Justin Donald, hones in on this concept by asking the important questions, “Who are you hanging out with? What is happening in your mind? Spending time with individuals with the mindset you want is critical to your financial success.”

Who do you go to when you want to talk about investing? What individuals come to mind when you’re trying to make a critical financial decision?

If you’re feeling emotional or worried, what person can talk you down and help you make a rational decision? Make sure you have answers to these questions if you want to protect and build your wealth by navigating today’s investing challenges.

3. Embrace Growth

Investing can be formulaic at times. There are many tried and true investment strategies that can still yield sizeable returns in the modern economy. And yet, you never want to approach your investment activity with a stunted, one-dimensional strategy.

It’s easy to feel overwhelmed by wealth-threatening circumstances and to resort to past investing behavior. However, the truth is, challenging times also tend to be filled with unique, profitable opportunities — for those who are willing to look for them, adjust their strategies, and then take action. That’s where a growth mindset can play a pivotal role.

The concept of a “growth mindset” revolves around believing that your talents aren’t fixed but can continue to develop and grow over time. Professor of Psychology at Stanford University, Carol Dweck coined the term.

She emphasizes that it’s very difficult to have a mindset of growth, adding that “One reason why is we all have our own fixed-mindset triggers. When we face challenges, receive criticism, or fare poorly compared with others, we can easily fall into insecurity or defensiveness, a response that inhibits growth.”

While a growth mindset is often attributed to things like workplace advancement and developing skillsets, it also applies to finances and investment. If you allow triggers to lead to impulsive, habitual behaviors, you can pay the price (literally) in the future.

Even if you’re following past “fixed” successful strategies in an evolving investment landscape, it can lead to missed opportunities.

Instead, look for ways to develop and grow as an investor — even in a challenging or hostile environment. What can you do better? How can you take advantage of current opportunities?

4. Spread Out Risk

You saw this one coming, right? Putting all of your investments in too few investment vehicles can increase your risk in an environment where the entire market is struggling. Whenever investments are shaky, it’s wise to keep everything diversified.

It’s a concept that is always talked about, even though investors often don’t consider what it really means when it comes time to make real-world investment decisions.

Due founder and CEO John Rampton provides an excellent and understandable definition of diversification, “Diversification is an investment strategy where you own a variety of assets that will perform differently over time.”

In other words, you need to find different investments spread out across widely diverse channels if you want to keep your risk low in a volatile investing environment. You can’t just buy several different stocks or houses and call it a day.

Rampton details the end goal of diversification, explaining, “The idea is that it provides security and mitigates risk. If an investment fails or underperforms, you won’t lose everything.”

If you find that you’re concerned about certain external challenges, one way to calm those fears is by looking at something that you actually have some control over. Give your investment portfolio a review and consider if you’re staying diverse or not.

Do you have a solid foundation of steady investments, like bonds, mutual funds, and ETAs? Are these balanced out with higher-risk options, like individual stocks, real estate, or other alternative investments?

5. Don’t Be an Emotional Investor

Remember to resist the temptation to make emotional decisions. When investing challenges arise, it’s tempting to react without thinking. You might want to pull out of a cratering stock or sell a property in a market downturn. Whenever you feel a blind impulse to act on emotion, always resist the “go with your gut” mentality.

Instead, start by resisting fear and staying calm. Reach out to your support system for advice. Create a collection of financial quotes you can use to ground your thinking. However, if you do go with your gut, find ways to avoid acting on those emotions too quickly.

From there, you can approach the situation with a calm, cool, and collected mindset. There may be times when your initial emotional reaction is correct. When that’s the case, wait until you’re thinking clearly and then take action.

This may hurt you a little bit in the short term if you miss an opportunity or lose a little more before you sell an investment that’s losing value. But the potential catastrophes you can avoid by not operating in a high emotional state will pay off in the long run.

Creating A Better Mindset

If you find that your emotions are a distraction from your investing strategy, look for other tools to help you stay focused, too. For instance, when you’re in a challenging investment atmosphere, you can regain a sense of calm and control by setting up your own challenges to keep you on track.

Clever Girl Finance writer Athena Lent highlights the fact that giving yourself financial challenges can boost self-confidence and help you prioritize. She adds that it can be an effective way to reshape goals to match your actual needs, too, “We often set goals for ourselves based on what other people do and not what we want to do.

Outside noise can influence what we tell ourselves, so instead of focusing on what we want, we focus on what others tell us we need.”

If you want to avoid acting emotionally, do whatever it takes to keep both your mind and emotions focused on the straight and narrow path.

Though there is currently so much financial uncertainty, there are still many solutions to navigate today’s investing challenges. In fact, there are few points in recent memory that compare to the number of potential threats facing the financial sector.

And yet, if investors can maintain the right mindset and create the internal infrastructure to guide their investing activity, it can not just help them avoid making mistakes. It can also set them up to capitalize on opportunities as they arise.

Article by Peter Daisyme, Due

About the Author

Peter Daisyme is the co-founder of Palo Alto, California-based Hostt, specializing in helping businesses with hosting their website for free, for life. Previously he was the co-founder of Pixloo, a company that helped people sell their homes online, that was acquired in 2012.