How to Sleep at Night: Investing Strategies for Uncertain Markets

Despite the stock market performing historically well since the 2008 and 2020 crashes (with the exception of 2022), it is completely normal to feel a sense of dread or uncertainty about your portfolio. World events and economic headlines can make even the most seasoned investor nervous.

If you find yourself losing sleep over your investments, here's a practical guide to managing risk without completely exiting the market; "How to Sleep at Night Investing in an Uncertain Market."

Here is a breakdown of the key strategies discussed in the video.

1. Determine Your Risk Appetite (The Formula)

Before you can manage uncertainty, you need to define what kind of investor you are. Mahoney suggests breaking this down into three categories: Aggressive, Moderate, and Low Risk.

• Aggressive: This doesn't mean buying speculative crypto or "moonshot" stocks. It simply means your portfolio leans heavily toward stocks over bonds [01:43].

• Moderate/Low Risk: You prefer a higher cushion of safety, which usually means a higher allocation of bonds.

To determine what percentage of your portfolio should be in stocks, you can use these simple formulas based on your age:

• Aggressive: 120 - Your Age = % in Stocks

• Moderate: 110 - Your Age = % in Stocks

• Conservative (Classic Boglehead): 100 - Your Age = % in Stocks

Note: the classic "100 minus age" rule might be too conservative for modern times, potentially causing you to miss out on significant returns [03:03].

2. The Problem with Manual Rebalancing

Once you have your ideal ratio (e.g., 80% stocks / 20% bonds), maintaining it can be a headache. If the stock market drops, your bond percentage artificially rises, forcing you to sell bonds and buy stocks to get back to your 80/20 split.

Doing this manually is burdensome. It requires constant vigilance, can incur transaction fees, and may trigger unwanted tax consequences [05:13].

3. The Solution: Target Date Funds

A simpler alternative for the nervous investor is the Target Date Fund. These funds automatically adjust your risk based on your retirement year. If you plan to retire in 2055, you buy the "2055 Fund." It starts aggressive (mostly stocks) and slowly becomes conservative (more bonds) as you get older [05:47].

The "Sleep at Night" Hack: If you are particularly risk-averse or nervous about a looming correction, here's a clever tweak: Choose a Target Date Fund with a date sooner than your actual retirement.

• Example: If you plan to retire in 2065 but are nervous, invest in the 2055 fund instead [07:48].

• Why? The 2055 fund will have a higher allocation of bonds right now compared to the 2065 fund.

This strategy allows you to stay invested in the market while enjoying a larger safety cushion. Plus, the fund managers automatically rebalance for you—selling bonds to buy stocks at a discount during market dips—without you having to lift a finger [08:09].

Final Thoughts

The most important takeaway is to stay in the game. If you have more than 10 years until retirement, history suggests that staying invested is the best way to grow wealth, as you have plenty of time to recover from downturns [09:55]. However, if modifying your strategy allows you to sleep better and prevents you from panic-selling, then leaning more conservative is the right move for you.

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Seeing Your Whole Wealth Picture with Monarch Money

Our core belief is that the most important objective of smart budgeting is not just saving money—it's building net wealth. It's about paying down debt, managing expenses sustainably, and strategically building a financial legacy.

Many budgeting apps do a decent job of tracking daily spending, but few seamlessly connect that to your overall net wealth picture. That’s where a tool like Monarch Money excels, providing a clear, motivating view of your financial life.

Based on our recent overview, here is a breakdown of how Monarch’s Accounts and Investments features work together to give you total financial clarity.

1. The Accounts Tab: Your True Net Worth Dashboard

The Accounts tab in Monarch Money essentially acts as your personal "Net Wealth Tab," consolidating everything you own and everything you owe into one clear snapshot [01:37].

Understanding the Components:

• Net Wealth: This is the core of the tab, showing your Assets minus your Liabilities [02:00].

  • Assets: Everything you own, primarily your cash (checking, savings, emergency fund) and investments (IRAs, brokerage accounts) [02:22].

  • Liabilities: Everything you owe, such as credit card debt, student loans, and mortgages [02:40].

This visualization is a powerful motivator. You can see a breakdown of your assets rising above the zero line, while liabilities, such as credit card debt, are clearly marked "underwater" [04:11]. This clear visual contrast reinforces your goal: driving the assets up and liabilities down to zero [04:25].

The tab also provides a detailed breakdown of your individual accounts, including your crucial emergency fund (aiming for 3-4 months of expenses) and your credit card balances that you’re working to eliminate [07:02].

2. The Investments Tab: Drilling Down on Growth

Once you’ve seen the top-level net worth number, the Investments tab breaks down the holdings within your investment accounts [08:05].

For many of our clients, especially when planning for retirement, we recommend a foundational strategy utilizing low-cost, broad market Exchange Traded Funds (ETFs) like VTI (Vanguard Total Stock Market Index Fund) or VO (Vanguard S&P 500 ETF) [08:41]. This tab allows you to track your portfolio's performance directly against the overall market, ensuring your investment choices are meeting expectations [09:08].

3. The Secret to True Diversification

While Monarch Money is excellent at tracking value, it doesn't always show the individual companies within a broad ETF. As part of a sound financial strategy, you should always know what’s "under the hood" [10:16].

By looking up the details of an ETF like VTI (The Total Stock Market ETF), you discover you are investing in incredible diversification:

• Massive Holdings: VTI holds over 3,500 different US stocks [11:12]. This level of diversification reduces risk by spreading your investment across the entire American market.

• Sector Dominance: The fund is naturally weighted toward the industries that drive the US economy, including Technology, Consumer Discretionary, and Financials [11:55].

• Investing in the Best: When you buy a share of VTI, you are automatically participating in the growth of the largest and most successful companies—including giants like Nvidia, AMD, Tesla, Alphabet, and Microsoft [13:12]. An index fund ensures that as these dominant players grow, your investment grows with them [13:42].

Seeing your net wealth clearly and understanding the components of your investments—down to the specific stocks and sectors—is the key to staying motivated and on track for your long-term financial goals.

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Ready to Upgrade Your Financial Life? Why We're Loving Monarch Money

We’ve seen and used them all—from EveryDollar to You Need a Budget (YNAB)—but Monarch Money truly brings your full budgeting and wealth picture together into one intuitive place [00:21]. It’s a game-changer, and we’re here to break down the two most crucial features for anyone starting or continuing their personal finance journey: the Budget and the Goals feature.

Part 1: The Intuitive Monarch Budget

Getting started with a budget can be stressful. Monarch Money eliminates much of that initial friction with its advanced, AI-powered setup [02:00].

When you link your accounts, the app immediately goes to work:

1. Automatic Budget Creation: It automatically creates a starting budget based on your past spending [01:29].

2. Accurate Categorization: It categorizes your past transactions with remarkable accuracy—we’re talking around 95% accuracy [01:53]—saving you hours of manual entry.

Of course, we never want to take an automatically generated budget at face value. You need to be intentional, and that’s where a coach comes in [01:36]. But Monarch gives you a clear, clean starting point structured into three main expense groups that we love:

1. Fixed Expenses [03:06]

These are the predictable bills that hit your account every month, like rent, an auto loan, or internet/cable. This is your baseline—the money you know is coming out no matter what [03:30].

2. Flexible Expenses [04:17]

These are regular expenses that vary, such as groceries, gas, or entertainment. Monarch enforces a fantastic piece of financial discipline here: you must set a top-line amount for your flexible budget [04:51]. This means that while you can move money between your flexible categories (e.g., spend more on entertainment), the total for the group must remain fixed. If one goes up, another must go down, holding you accountable to your overall budget [05:12].

3. Non-Monthly Expenses [05:33]

This category is perfect for irregular costs like Christmas gifts, annual memberships, or vehicle registration. You can designate these as a rollover fund [06:14]. This allows you to track a starting balance and a target amount, so you know exactly how much you have saved up for that specific item, without it being a surprise expense when it finally hits [07:08].

Part 2: Transforming Savings with the Goals Feature

While the budget helps you manage your money now, the Goals feature is where Monarch helps you build your wealth future. This is one of the app's standout differentiators [11:55].

Goals are designed for big-ticket savings items, such as:

• A fully-funded Emergency Fund [12:34]

• A down payment on a home

• Saving for an expensive house repair (like a boiler replacement!) [14:37]

The power of Monarch’s Goals is its unique ability to allocate a specific portion of your existing savings account balance toward that goal [13:31]. Instead of just tracking a number on a screen, you are tagging the actual money in your high-yield savings account (HYSA) to a specific purpose.

How Goals Integrate with Your Budget:

Once you set a goal (e.g., save $3,000 for house repairs) and decide on a monthly contribution (e.g., $100/month) [16:03], Monarch automatically adds that amount as a line item to your monthly budget [16:24].

This makes goals an incredibly powerful category because you’re not spending the money, but you are setting it aside—and most importantly, you know exactly which part of your overall savings balance is allocated to achieving that specific future aspiration [16:49].

Start Your Journey with Coda Financial Coaching

Monarch Money offers an intuitive, comprehensive solution that helps simplify personal finance. However, every personal finance journey benefits from a plan and a partner.

Your financial coach can help you:

• Be intentional about setting your initial budget numbers [01:36].

• Set the right flexible budget limit that enforces discipline without sacrificing quality of life.

• Tweak your budget to align with your personal aspirations and long-term goals [02:15].

Ready to stop feeling stressed and start building wealth with confidence? Contact Coda Financial Coaching today to leverage the power of Monarch Money and design a budget that works for you.

Watch the full video for a step-by-step walkthrough of these features:

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