The financial collapse of 2008 seriously impacted millions of Americans retirement accounts, so much so that we’re still trying to recover. So what’s happening now, and are we doomed to repeat history? The fallout from brexit is still having an effect on markets worldwide, and China’s economic slowing is forcing other markets to beg the question… are we safe from another economic crisis? Is there more volatility is in store?
Will your retirement portfolio be up or down tomorrow? What about the next day?
Knowing how to handle stock market turmoil is important for your peace of mind and for your financial health.
Be informed, because financial markets are incredibly complicated, but you should have a reason for being invested in whatever way you are invested. Have a philosophy and goals in mind, and stick to them. That way you can make investment decisions based on substance and not just the way the wind is blowing.
Don’t blindly trust any and all investment advice. Whether it is watching cable news, talking to your neighbor or even reading this article — be wary of all financial advice. There are exceptions to every rule and that is especially true of investment wisdom. Thankfully, the Department of Labor passed the new fiduciary rule on financial advisors this past Spring. The new rule imposes limits on how brokers offer financial advice to retirement savers, so that the advisors own interests aren’t at the forefront of your retirement.
Diversify. The old adage, “don’t keep all of your eggs in one basket,” is particularly true for retirement savings. You might want to hold stocks, but you would not want all of your money in stocks, because usually if one aspect of financial markets is down, something else is seeing gains. A financial advisor can help you diversify your money into a mix of investments that is likely to reduce your risks while still realizing gains.
A diversified investment portfolio example might have 30 percent in stocks (of a variety of types), 20 percent in annuities, 20 percent in bonds, 15 percent in precious metals and 15 percent invested internationally.
Have a retirement plan and keep it updated. Your retirement plan should have a lot more to it than just savings and investments. Most people have other significant sources of wealth that could have a greater impact on our retirement security than savings.
For example, most of us have home equity, the ability to go back to work or delay our retirement date and — if we are lucky — we also have friends and relatives to help us smooth out our financial lives.
If you are experiencing losses in retirement investments, consider alternate sources of wealth before selling stocks that are down. Many people get a reverse mortgage as a source of money that can be used instead of stocks. Other people choose to go back to work to help make ends meet.