Will Resilience Be the Theme for 2023?

Cypress trees are brittle and easily snap in a storm, but palm trees can bend when faced with hurricanes. Their long-term strategy is to be flexible enough for unpredictably bad weather.

It’s food for thought regarding how we approach our savings strategy: Is it flexible enough to withstand the occasional economic storm?

Here’s an overview of what it means to have a resilient strategy in 2023, and how flexibility could play a bigger role in keeping wealth secure.   

Security Versus Stability

When seeking to keep their funds secure, most people opt for stable, low-risk options. But when the market is unstable, it’s easier to see why stability and security shouldn’t necessarily be considered one and the same.

For example, the S&P 500 Index is a popular part of many strong retirement strategies. However, relying too heavily on the S&P 500 became a potential setback last year, especially for people expecting to retire soon.

Is resilience becoming more important?

A good strategy strives to find a balance between stable assets and flexible buffers. But the past few years have made many people start to reassess conventional rules of thumb on what a healthy balance looks like. Why is that?

The IMF and Blackrock both expect volatility this year, but some experts believe that the typical ebb and flow of the economy is also becoming more drastic over time. If that’s true, flexibility and resilience may start to influence our ideas of what financially secure decision-making looks like.

Regardless, it may be a good time to look at your approach to flexibility and stability. Ask yourself whether it could provide the security you need — even when the economy can’t.

Have questions about the right balance for your strategy? You’re always welcome to reach out so we can discuss more ways to strengthen and grow your nest egg.