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How a worldwide crisis affects your investment potential

Understanding historical volatility, time horizons, and portfolio options

by Jeff Landt, Vice President and Director of Investments

As we all continue to adjust to the impacts of COVID-19, I can’t help but think of how this pandemic will affect investors for many years to come.

I don’t think about the impact of the temporary decline in portfolio values, which is to be expected during periods of high uncertainty, but the impact this has on each of us after normal, everyday life was at a standstill for months.

If you turn on the TV or radio, every ad will tell you we’re living in “unprecedented times.” Many think this era of history is especially unique, but that fails to recognize what humanity has survived in the past.

"The farther back you can look, the farther forward you are likely to see."

—Winston Churchill

Following World War I, a period of unparalleled death and destruction, a flu pandemic took the lives of 650,000 Americans in 1918 and 1919. Following this medical crisis was a brief depression and then the Roaring Twenties.1

I don’t share this to suggest a pattern of what to expect next, but to acknowledge that what Harry S. Truman said rings true: “The only thing new in the world is the history you do not know.”

Today, we’re working through a series of hardships we have never personally experienced. This can lead us to believe the rules have changed and everything is different.

In the past, none of us had experienced a technology bubble or a financial crisis resulting from the collapse of complex mortgage securities. Those crisis events were as unique as all crisis events are, but they are remarkably similar to every other temporary market decline.

Within the annals of history, we have seen wars, bubbles, pandemics, and financial crises. These types of events will continue to cycle unpredictably and shake your confidence in your investments.

Despite the news of the day, the financial professional’s mission remains unchanged: We help our clients create portfolios that can support their goals given enough time, money, and patience.

Goals-based investing is a powerful framework.

The coronavirus has certainly been a curveball for America, but how one invests successfully over a lifetime has not changed.

Each investment vehicle has predictable results within a certain timeframe. Money market accounts may not provide high yields long-term, but they are often a reasonable choice if you need to access that cash soon. Equities will rise and fall often over a five-year period, but in the past, these investments have trended upward given time.

If you can compartmentalize your assets according to your goals and that goal’s time horizon, it will help you immensely. Talking to a financial representative can be invaluable when making these decisions.

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Finally, remember these tips for investing in hard times:

1. Invest for the long-term.

There will always be ups and downs in the market, but the best investors stick to their long-term strategy, even during inevitable dips.

Working with a financial representative who has your interests in mind can help you manage emotions and make wise investment decisions for long-term results.

2. Diversify your investment portfolio.

Talk to a financial representative about how to use cash, fixed income, and equities in your investment strategy for the results you want. The right representative will ask about your risk tolerance, goals, objectives, and time horizon to ensure you’re investing in a way that makes sense for your individual situation.

3. Rebalance your assets on a regular basis.

As your financial goals and life situation shift over time, you will want to reallocate your investments to make sure you’re making good choices for the time you have in the market.

In many cases, investors meet with their financial representative regularly to ensure they are on track to reach their goals and their investments are in the proper vehicle to balance potential and access.

We’ve been around for 112 years of market fluctuation.

North Star has roots dating back to 1908. We’ve seen two world wars, 10 national outbreaks,2 and 13 significant recessions.3

Through each national crisis, North Star clients rely on the steadfast guidance from caring and competent financial professionals who walk right through it with them, year in and year out.

Set up a free, no-obligation initial consultation with an associate today to learn how we can help you create an investment strategy that anchors your emotions and helps you reach your financial goals within your time horizons.

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About Jeff Landt

Landt_Jeff_circle.pngVice President and Director of Investments

jeff.landt@northstarfinancial.com | 612.617.6116

Jeff’s primary area of expertise is the investment management process. He assists the firm’s associates with portfolio strategies, portfolio construction, and the best practices of portfolio management.

In addition to his leadership roles, he is also a practicing associate with North Star Resource Group, specializing in retirement distribution and wealth management.

Contact Jeff

Investments will fluctuate and when redeemed may be worth more or less than when originally invested. Past performance is not a guarantee of future results. 

1Roos, D. (2020, April 24). When WWI, Pandemic and Slump Ended, Americans Sprung Into the Roaring Twenties. Retrieved July 10, 2020, from https://www.history.com/news/pandemic-world-war-i-roaring-twenties

2Robinson, D. (2020, March 24). The Worst Outbreaks in U.S. History. Retrieved July 10, 2020, from https://www.healthline.com/health/worst-disease-outbreaks-history

3Chappelow, D. (2020, June 21). A Review of Past Recessions. Retrieved July 10, 2020, from https://www.investopedia.com/articles/economics/08/past-recessions.asp

Jeff is a registered representative and investment advisor representative of CRI Securities LLC and Securian Financial Services Inc.

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