Major economic and political changes often disrupt the stock market, causing dramatic swings in either direction. For many investors, volatility is today's "new normal." For those with retirement savings in the market, the constant stream of news about ups and downs can be worrying (or downright terrifying). If you're anxious about your investments, here's some advice on what to do when the markets dive and peak.
When the market is down:
For many consumers on the cusp of retirement, the sight of down arrows on the nightly news is the stuff nightmares are made of. First of all, don't panic. Dips in the market don't have to mean the end of the world (or working longer) and pulling your money when the market is down is generally a bad idea. Second, evaluate your portfolio, especially if you haven't touched it since you set it up. As you age, it's important to adjust the amount of risk you're taking with your investments. A properly adjusted portfolio will allow consumers nearing retirement to weather the storms of a volatile market. Finally, consider diversifying your portfolio, which is more complicated than just divvying it up between stocks and bonds. Your investments should expose you to a blend of equity styles, geographic regions, and asset classes. A financial advisor can help you develop a plan that fits your needs, preferences, and risk tolerance.
When the market is up:
While it can be exhilarating to see the value of your investments shoot up, don't get tempted to dump more into that particular stock. Often, a stock's meteoric rise is just the ride up in the elevator before it heads back to the basement again. The best way to keep yourself from taking on too much risk is to stick to your strategy, no matter how much a particular stock is performing. However, if you have a need to pull money out of the stock market (for example, using money from an investment account to finance a large purchase) the best time to do so is when the markets are up.
Get Expert Advice
Investing is a complex financial topic that requires years of study to fully comprehend. The average consumer doesn't have the expertise or the time to fully explore and understand all the possible options. The best plan is to find an expert adviser who can help you set long-term investment goals that match your personality and needs, and devise a strategy to help you achieve those goals. If your local bank doesn't handle your retirement and/or investment accounts, they will be able to recommend a good advisor for you to talk to for guidance.