Broker Check
Investing in 2023: Exercise Preparation Instead of Panic

Investing in 2023: Exercise Preparation Instead of Panic

January 20, 2023

With inflation, rising interest rates, and stock market volatility, most people were glad to see 2022 go, but can we expect 2023 to be any better?

No one has a crystal ball, and even the most educated guesses are still just that: guesses. For example, a little more than a year ago, the total cryptocurrency market capitalization reached almost $3 trillion, and, in some quarters, optimism abounded. In just a few months, by January 2022, the market plummeted 40 percent, wiping out more than $1.2 trillion. Of course, all of that occurred before anyone knew about the accusations of fraud leveled at FTX’s executives.

The point is that the average investor is better off taking a more tried and true approach than trying to catch lightning in a bottle by following the latest fad. Before you invest, it always pays to do plenty of research, ask lots of questions, and determine what level of risk you will be comfortable with. If you’re not sure where to start, the services of a trusted financial advisor can be invaluable.

At Compass Wealth Management, we believe everyone needs a financial plan to follow. As a first step, we advise our clients to create a monthly budget that charts all expenses versus income. By doing this, you can see how your money is spent and where you might be able to cut back on certain expenses and increase savings.

Once you create a budget, look at how much of it goes to paying off debts. According to Experian, the average American family’s debt in 2021 was approximately $96,000. That includes credit card balances, mortgages, student loans, and other debts.

The first step is to pay off high interest rate debts. The more you can pay off each month, the less you will be paying in interest over time. As you pay down your debts, this will give you more breathing room in your budget to build an emergency fund in your savings.

By having an emergency fund, you are creating a cushion to see you through when an unexpected expense occurs. This can reduce the stress that many people feel when the economy takes a downturn.

All of this should be done before you determine where to invest your money. By taking the steps to make a plan, committing to your plan, and then following it even when times are dicey, you are preparing for future financial success.

Cryptocurrencies, Digital Assets and other Blockchain related technology (such as Bitcoin, Ethereum, NFTs and others) are not securities, not regulated and not approved products offered by Cetera Advisor Networks LLC, and cryptocurrency or other blockchain related non-securities products cannot be recommended, offered, or held by the firm.