Investing for retirement in a volatile market
In times of uncertainty and rapidly moving markets, staying the course and focusing on the long-term is a best practice. While market volatility is not fun, a diversified portfolio is well positioned to minimize damage. As we have said in the past, we want to avoid making short-term decisions with long-term money. With an ever-changing landscape, here are some investing tips for a volatile market.
Don’t panic, you are investing for the long-term: Don’t let short-term emotions dictate how you invest your long-term assets. Remember you are not investing for today, but for the future.
Don’t time the market: Timing the market will likely not improve investment results and is more likely to result in disappointing returns.
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. How you construct a well-diversified portfolio is based on your risk tolerance.
Understand your risk: Sure, you are 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 measures how much you can lose and still meet your basic goals, while being able to sleep at night.
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. By continuing to contribute, you will be taking advantage of stock market “sales” by buying additional equities at much lower prices.
Stay in the market: If you 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 to get out of the market totally.
This newsletter is provided for informational and educational purposes only and is intended to be used as a guide for planning. It should not be construed as investment, tax, financial or other advice. Data and other information provided by third parties are believed to be obtained from reliable sources, but we do not guarantee the accuracy of such information. Investing in securities involves the potential for gains and the risk of loss and past performance may not be indicative of future results.