Local financial advisors talk strategy heading into 2023

The past year has been characterized by an unpredictable financial market. From stock market swings to record inflation, individuals may find it difficult to stay optimistic about their investment plan. Despite uncertainties, local finance professionals preach a similar message, “Stay calm and stick to a plan.” Here, they share their advice and insight for creating a healthy financial plan going into the new year.

Derieck Hodges

Financial Planner Anchor Pointe Wealth Management (Jackson, Missouri)

What does it mean to diversify your investment portfolio?

There is a whole array of things you can own. So, Certificates of Deposit. Are they good? Yes. Should I have all my money there? No. … You should have these different types of instruments, so not all your money behaves the same way. This comes back to the whole [financial] timeline. So, those investments that I’m going to be selecting will help give us the diversification and fill a role on my [financial] timeline. I’m aligning my money from a good timeline standpoint, and I’m keeping risk under control.

What is your perspective on Certificates of Deposit (CDs) in the current market, particularly brokered CDs?

These [current] increasing interest rates are horrible if you’re trying to buy a house right now, but if you’re somebody who’s trying to live on your savings, these interest rates are kind of a lifeline. The struggle we have with cash is it’s still not earning enough to beat inflation. So, if inflation is running 8%, even if I buy a 3% CD right now, I’m still in a hole, but at least I’m getting 3%. Just a year ago, it was probably 1%.

But I still think the conversation begins with ‘What’s the purpose of the money?’ If I have enough time ahead of me, that could make sense to deploy my money [in stocks] and try to get, hopefully, a higher return than what CDs will do. So, even though CDs are good right now, I still don’t think they’re the solution for everybody.

What are your perspectives on short-term bond ladders in the current market?

In the last month, I’ve said bond ladder a thousand more times than I have in the last 10 years.

So, think about the [short-term bond] ladder as moving up a ladder to the roof of your house. … What I’m going to do is give the government $100,000, but I’m going to ladder the maturities, and put $25,000 into a three-month bond, another $25,000 in 6 months, maybe another $25,000 in a year and $25,000 in two years. So, I’m staggering those maturities. The longer bonds should be getting a higher rate. The lower maturity should get a lower rate. But overall, when you blend it together, you should be getting a relatively high interest rate. This can be a great autopilot strategy to implemnt in a rising interest rate environment. As your short-term bonds mature, you automatically go to the back of the long term bonds to capture the now higher interest rates. … Bonds can lose value in an increased interest rate environment. Those short-term bonds protect you a bit from that.

Justin Martini

Justin Martini

Justin Martini

Managing Director and Senior Wealth Advisor Cape Rock Private Wealth (Jackson, Missouri)

For first time stock market investors, what is the best way to get started?

Everybody always worries about trying to get the biggest return possible and trying to save as much as you can. Time is a huge factor that you can’t change. Time is a huge component of that equation. So, start early. I would say how to get started ... maybe just buy an index fund that represents the whole market, like the S&P500 index fund. Start early, invest often.

How can current investors navigate the swings taking place in the market right now?

Don’t worry about what the market is doing on a daily basis. I know we’ve had some big daily swings that are making people nervous, but as for myself, most of my clients already have a significant amount of wealth and it’s diversified through a lot of different assets: stocks, bonds, real estate, farmland and maybe, their own business. So, when I’m suggesting changes it’s usually very modest. I wouldn’t suggest anyone go ‘all in’ or ‘all out’ at this time. With stocks or bonds being down 20%. I would start buying at these levels. Especially with something that’s down significantly, a company or fund you’re familiar with.

What are your financial outlooks or predictions for the new year?

I don’t see a solution to our lack of energy supply for the foreseeable future, so I think energy companies are going to be producing at above average rates and selling at above average prices. … So, I think energy has been the play this year, and I think energy is going to continue to do well next year.

I think there are some bonds that are selling at big discounts. You look into some of these types of bonds and you hold them for a few years, I think you get significant returns from some bonds. Like in 2009 and 2010, there were some segments of the bond market that outperformed stocks, so I can see something like that possibly happen with some segments of the bond market.

Tyler Cuba

Tyler Cuba

Tyler Cuba

CEO and Senior Wealth Advisor Cuba Financial Group (Cape Girardeau, Missouri) **How does your investment advice change based on the time horizon of the investor?

Time is an asset we often don’t think about. Historically speaking, the longer the time horizon the higher the probability of positive returns. The opposite is also true as shorter time horizons, historically, have produced lower probability of positive returns. Shorter investment time horizons should be carefully considered and planned for when they are less than five years.

What are some strategies to stay ahead in the current financial climate?

There is no doubt that these are currently difficult economic times. However, getting through any environment, no matter how hard, always begins with a solid financial foundation. Making sure you have a sound budget in place, removing high interest debts, shoring up your emergency fund of three to six months’ worth of expenses and maintaining your investment dollars devoted to your future.

What are your main three pieces of financial advice to start off a new year?

Make a list of the financial items you should start doing, stop doing and continue doing. Work with a professional that specializes in financial planning, and doesn’t just sell investments, to implement a financial plan specific to your needs. Difficult and challenging times present opportunities, and with a plan in place, you will be well positioned to take full advantage of those opportunities.

Brooke Roth

Brooke Roth

Brooke Roth

Financial Advisor (AASM) Accredited Asset Management Specialist Edward Jones (Jackson, Missouri)

How can current investors navigate the swings taking place in the market right now?

During these periods of volatility, it’s really important to focus on the things you can control, just like everything else in life. So, for starters don’t overact during short-term price drops. Hasty decisions are rarely the best ones. You really need to understand your short-term and long-term goals. You really need to do the hard thing, which is investing regularly, even when the market is up and down and sideways.

What is your main advice to clients right now?

First, I would say just to be patient. … You can help yourself by taking it from a long-term view. … next would be to review your risk tolerance. So, if this market fluctuation is giving you a hard time coping with those investment losses, you might want to review your risk tolerance. … So, this bear market, yes, it’s an event, but it shouldn’t change your goals, so you should stick to your strategy.

“It’s also a good time to look for buying opportunities, so usually in a downward market you can find some quality investments at attractive prices. … And look for some help. It’s just nice to have someone who’s in your corner and keeping your strategies in check.

What’s a strategy to stay ahead financially during the current climate?

Just trying to stay ahead financially, you really should evaluate your current spending. Most of us don’t realize how much we’re spending on everyday things. That can be on eating [meals] out or [paying for] subscriptions you even forgot you had.

We recommend having three to six months of living expenses set aside in case of a job loss or emergency and that’s really up to each person … and just making sure your portfolio is properly diversified, like I said keeping those long-term goals in mind when making adjustments.

Brock Alspaugh

Financial Planner Innovative Financial Solutions (Cape Girardeau, Missouri)

Brock Alspaugh

Brock Alspaugh

What is your advice for those approaching retirement who haven’t begun serious financial planning?

Obviously, the earlier you start planning, investing and saving, the better off you are going to be in retirement. If you are nearing retirement, the sooner you can meet with a financial planner the better.

One thing you can do right now is make sure you are maximizing your social security benefits. Social Security is the foundation to a good retirement plan. The next step would be to fill in the gaps with investments you have accumulated over your working years.

What are some ways to create a budget for a comfortable retirement?

First, you need to find out how much money you will need each month to maintain your lifestyle. Once this has been established, we want to create an income stream for you that meets this need. If you haven't saved enough money to meet your ideal lifestyle, then a discussion takes place on what can come out of the budget. Of course, it is best if you have saved enough and made wise budgetary choices to avoid the elimination conversation.

What is your financial advice during a time of recession?

I've had that question a lot this year. Stick to your plan. Now you may want to review a few things in your retirement strategy. 1) Invest more in the stock market when it goes down, and 2) Look at alternative investments that may include income protection.

But the most important think you can do is stick to your plan. Don't make adjustments to your investments because you think the stock market is heading down. Stay patient and disciplined to your strategy.

Clay Hahs

Wealth Management Advisor (J.D.) Northwester Mutal – The Hahs Group (Cape Girardeau, Missouri)

Clay Hahs

Clay Hahs

How does your investment advice change based on the time horizon of an investor?

Time horizon is an extremely important factor in allocating an investment portfolio. Generally speaking, the longer a person has before needing access to money, the more risk he or she can afford to take in an investment account. That being said, other factors, like liquidity needs, other assets and sources of income, must be taken into account.

Do you have any financial outlooks or predictions going into 2023?

In terms of the market [for 2023], we are watching the Federal Reserve in its attempts to quell inflation, along with the impact inflation is having on both the labor market and consumer spending. These can be bellwethers for market trends, although anyone with money in the market knows these are not fail-safe indicators. So, we simply do not engage in large-scale speculation about where the market will be on a given date in time. Rather, we keep our clients diversified, re-balance accounts at pre-determined moments and follow objective economic data as it comes from the source rather than opinion pieces.

For young investors, what is the best way to get started in creating a financial plan?

Every financial plan should start with a budget. Track and control spending and commit to a goal of saving 10-15% of your earnings. Once you have a budget, there are three initial steps that nearly all individuals and families should take: First, set a goal to have three to six months of expenses in some form of available cash or cash equivalent. Second, develop a plan to eliminate any unsecured debt as quickly as possible. Third, explore your options for disability income insurance and, if appropriate, life insurance.

Clayton Hahs is a Wealth Management Advisor with the Northwestern Mutual Wealth Management Company. All investments carry some level of risk including the potential loss of all money invested. No investment strategy can guarantee a profit or protect against loss.

Chance Franklin

Financial Advisor Stifel (Cape Girardeau, Missouri)

Chance Franklin

Chance Franklin

What is the importance of having a diversified investment portfolio?

The heart of diversifying a portfolio is asset allocation and [that] is basically deciding what portion of a portfolio’s funds should be put into the three primary asset classes: stocks, bonds and cash. So, by having exposure to different asset classes, your overall investments would experience less fluctuation and have more preservation in value than individual assets within the portfolio. This means that in times of market volatility, a properly allocated portfolio may not be as severely impacted.

How can investors navigate swings taking place in the stock market right now?

Sticking to a plan and avoiding the temptation to try to time the market. There’s an old saying that successful investing comes from the ‘time market’ and not ‘timing the market.’ Unless you have the crystal ball to tell you the perfect time to jump in and out of the market, it’s not a practical strategy. And by just parking your money in cash, you run the risk of missing out on gains when the market recovers.

What is your perspective on Certificates of Deposit (CDs) in the current market, particularly brokered CDs?

It’s fair to say that CDs are finally back in style. Of course, the major attractiveness to CDs is they carry the FDIC protection from potential loss, and then, with the recent interest rate increases, CDs are really a nice complement for those clients looking for safer methods of producing income.

Each individual interviewed for B Magazine cannot guarantee profit or protection from loss with any investment strategy. All investments carry a level of risk.

All ideas shared with B Magazine are opinions based on each individual's experience and knowledge within their financial careers.