Investing Tips in Any Market

Retirement investing tips for any market

Don’t Panic

Remember you’re investing for the long term

Don’t let short-term emotions dictate how you invest your long-term assets. You should continually reassess your goals and carefully consider adjustments when appropriate. Remember you are not investing for today, but the future.

Understand how much risk you’re willing to take

Sure, you are more than willing to accept the large returns that an aggressive portfolio may receive, but are you also willing to accept the large loss that an aggressive portfolio is bound to experience from time to time? Risk tolerance is a matter of how much you can lose and still meet your basic goals, while being able to sleep at night. Periodically perform a quick checkup by taking a risk quiz to determine your comfort level.

Stay Diversified

Asset allocation is the driving force behind what determines investment return. If you have a well- diversified portfolio, history shows you will recover over time, as will the security markets. Well-diversified portfolios contain bonds and stocks (both domestic and international), as well as investments in large, medium, and small-sized companies. How you construct a well-diversified portfolio is based on your risk tolerance.

Rebalance your account periodically

Set a schedule for rebalancing your portfolio and stick to it. Regular rebalancing keeps the portfolio in line with your risk tolerance and avoids any surprises.

Don’t chase investment returns

It’s tempting to move your account into funds that performed well last year or last quarter. Human nature is to chase investments that have recently done well; however, last year’s winners are no guarantee of this year’s winners.

Don’t back out of the market completely

If you still feel the need to become more risk-averse at this stage, it’s far better in the long-term to take one step down the risk ladder until you feel more confident with the stability of the markets, than it would be to sell all your equity assets and move to cash where you will probably remain long after the stock market recovery is well under way.

Guard against inflation!

People have a tendency to forget that with any inflation, a dollar today won’t buy the same amount of goods in the future. Currently, inflation is very low, however, it is no guarantee it will remain low in the future. Be mindful to select investments that will outperform infiation over the long haul.

Think twice before

Taking a distribution

There can be some considerable adverse tax consequences when taking a plan distribution before age 591/2. Explore accessing other funds in a time of need, before jeopardizing your retirement accounts.

Continue to save for retirement

The main factor in how much you will have in your retirement account is the amount you contribute. Continuing to save will soften the impact of market losses. And because of the losses, you may not only need to continue to save, but to increase your contribution, in order to stay on track with your retirement goals. In addition, by continuing to contribute, you will be taking advantage of stock market “sales” by buying additional equities at much lower prices.

This website does not provide investment, tax, financial or other advice. It is provided for informational and educational purposes only and is intended to be used as a guide.