Hardly a day goes by without the news of inflation or rising interest rates.

Inflation has continued to trend higher across most economies, setting multidecade highs in many cases. 

What we are seeing here might feel a little different, but it's not unprecedented. When inflation was soaring 40 years ago, short-term investing was uncertain. But people with patience came out fine.

Our investment philosophy is time-tested and built to withstand 10,000 market and economic outcomes with varying degrees of volatility and periods of negative returns. Since we can't control how long this slump will last, I like to help my clients focus on the things we can control. 

First, it's about setting aside enough money to pay your bills and cover emergencies. 

Second, stick to your long-term, goal-based plan. There is a reason why we build diversified portfolios—they give you the best odds of increasing purchasing power over the long term, even in a high-inflation world.

And finally, market recoveries take time. Resist the urge to monitor the news and your investments too closely. Instead, try to focus on the joyful moments in your life, because you can't get back lost time.  

When markets are down, it's not easy to watch your hard-earned savings lose value. 

As advisors, we're here to coach you through the rocky times and help you focus on the unique opportunities that accompany volatility.

For investors who have extra cash available, down markets offer a great opportunity to increase account contributions while prices are low or set up automatic contributions to buy in at different price points. 

When it comes to maximizing after-tax returns, tax-loss harvesting and Roth conversions can be effective strategies, especially when markets are down. We'll help you understand these approaches, how they work, and whether they're right for you. 

I always encourage my clients to set aside money in cash for emergency spending. When interest rates are up, it's easier to find competitive yields to help put your money to work for you. 

We realize that market volatility can stir up all kinds of emotions. But you can count on us to help you weather the storm with a plan that's built to last. 

2022 was really a rough year for bonds due to a rising interest rate environment brought on by the Fed to help combat inflation. Bonds took a big hit with performance results we haven't seen in most investors' lifetimes.

With all of this increased volatility and expectations that the Federal Reserve will continue to raise interest rates this year in 2023, a big question on many investors' minds is whether or not bonds are still a safe bet.

I like to remind my clients that more than 90% of the variation in their long-term performance returns within a diversified portfolio are determined by their asset mix.* In other words, the stock-to-bond ratio that we set up based on your goals and risk tolerance will carry the most weight in your long-term success.

So, as long as you're sticking to your long-term plan, we do believe that bonds are still a good place to be. They've provided a reliable balance to equity risk over the last 20 + years and we have no reason to believe they won't continue to play a valuable role in reducing overall volatility moving forward.

When bond prices are down, it's easy to focus on the decreased value of your funds. But we have to remember that the income that's generated on your bonds will go up—and that's a good thing. This gives us the opportunity to reinvest that money at a discount or set aside more money for monthly withdrawals. It's just another way for us to help get you closer to your goals!

*Source: Vanguard’s framework for constructing globally diversified portfolios (PDF)

Bhumi Shah, CFP®

Bhumi is a senior financial advisor and Certified Financial Planner™ (CFP®) professional in Vanguard Personal Advisor®, where she offers guidance and support to help clients achieve their financial goals. She began working in the financial services industry in 2008 and joined Vanguard in 2017. Prior to Vanguard, she held a variety of roles ranging from banker and trader to portfolio manager and financial advisor.

Bhumi earned a B.B.A. in business administration from Naranlala College of Commerce and Management, an M.S. in financial services from Saint Joseph's University, and a postgraduate diploma in business administration with a specialization in finance management from Welingkar Institute of Management.

Alex Hunt, CFP®

Alex is a financial advisor and Certified Financial Planner™ (CFP®) professional in Vanguard Personal Advisor®, where he builds lasting relationships with personal investors to help them work toward financial freedom.

He joined Vanguard in 2017 and previously served as a representative for Vanguard Participant Services and our Flagship clients. Prior to Vanguard, he worked as a financial advisor at AXA. Alex earned a B.S. in business and economics from Saint Joseph's University.

Joseph Crosby, CFP®

Joseph is a financial advisor and Certified Financial Planner™ (CFP®) professional in Vanguard Personal Advisor®, where he advises clients on the best way to accomplish goals like retirement, education, and estate planning.

He joined Vanguard in 2017. Joseph earned a B.A. in corporate communication from Duquesne University.