Many investors are concerned about how the Delta variant of COVID-19 will affect not only their health, but the global markets.
Certain regions around the globe are considering new lockdowns to combat the spread of the virus.
Sid Vaidya, Chief Investment Strategist for U.S. Wealth, says being more selective and sticking to your financial plan are all recommended actions to take amid this new uncertainty.
Healthy Financial Pullbacks
"Any pullback is a healthy development for markets," Sid explained earlier this month on "Money Talk." He added that markets are at historical highs, so a pullback might just be a reaction to that as well.
But the Delta Variant is affecting many countries and regions around the globe, causing cases of COVID-19 to spike in certain areas.
"Actions to blunt the spread may push out the trajectory for normalization," he explained. "With this in mind, it's important for investors to focus on diversification, higher quality investments and active management for the next 12-18 months."
But Sid stresses that a comprehensive plan and not trying to time the market are crucial not only now, but during one's entire investment journey.
If the Delta variant continues to spread, Sid expects government fiscal policy to continue to stimulate the economy, but with an action like this, interest rates could gradually rise over the next two years.
Therefore, he favors equity investments more than fixed income in a diversified portfolio. This doesn't mean one shouldn't be invested in both, just that equities could play a larger role in some client portfolios during this time.
He also recommends including a broad range of companies based on their size. This means investing in large, medium and smaller sized companies. In addition to size, he advocates investing in different styles – such as growth, value and dividend-paying stocks – and different regions.
But also, be patient.
"Humans are hard-wired to take actions," he said. "Sometimes this works against us. Headlines scream risk and this heightens our emotions."
Sid added that headlines shouldn't compel anyone to make hasty investment decisions to sell or buy due to the fear of missing out. Trying to time the market is extremely difficult and generally leads to poor performance, as opposed to staying invested in the market.
Instead, investors may be better served by asking themselves if anything in their financial plans have changed. Perhaps they've experienced a life event that now alters their goals or changes their risk appetite. If not, then sticking to your financial plan is the right course of action.
"A plan provides guardrails to help keep emotion from clouding your judgment and keeps you on a disciplined path towards success." he said. "Trust your plan. Trust your advisor."
The contents of this article are solely for informational purposes and not to be construed as investment advice.