Like many, you may be a little anxious. While we can’t predict the future, I can tell you that the best approach to market volatility is to focus on what we can control: staying calm and focusing on your goals.
What can you do?
Remember… as study after study has shown…Time in the market beats timing the market!
Still saving for retirement? Keep adding.
If you have a long-term time horizon you are in a strong position. Just keep adding money to your well-diversified investments. The longer the market is down, the more time you have to continue to add funds systematically through your payroll deductions into your company retirement plans, or through monthly investing into your personal or IRA accounts.
Sitting on some cash? Maybe it is time to get it invested.
Remember buy low, sell high. And yep, this is what buying low can feel like! I liken it to exercising. I know that if I get up and go downstairs to exercise, it really is good for my long-term health. I will groan about doing it, find reasons not to, but in the long-term I know it is the right thing to do.
With that said, make sure to always leave yourself some emergency money in cash. And if you can’t hold your investments for at least three years, don’t buy. Stocks offer a high potential return, but investors usually need to be willing to hold on during periods of volatility.
Currently in retirement?
It might be a good time to review your investment allocation with your Financial Advisor. You will want a sufficient amount of assets in fixed income so that there is a smart place to go for money during these uncertain times. Once your investment allocation is appropriate for your unique needs - Remain calm and sit tight!
Looking for a silver lining? Tax Loss Harvesting!
Somewhat simplified – tax loss harvesting is when you sell an investment in a taxable account (not an IRA or 401k) for a loss and use the proceeds to buy back a similar investment so that you can deduct the loss and save on taxes. You aren’t out of the market (thus not market timing) and your overall portfolio allocation remains the same.
If you think this might benefit you, contact your Financial Advisor to discuss further.
A diversified portfolio does not assure a profit or protect against loss in a declining market.
Because dollar cost averaging involves continuous investment in securities regardless of fluctuating prices, the investor should consider his or her financial ability to continue purchases through periods of falling prices, when the value of their investments may be declining. Dollar cost averaging does not ensure a profit or protect against loss.
The views stated in this letter are not necessarily the opinion of Cetera Advisor Networks LLC and should not be construed directly or indirectly as an offer to buy or sell any securities mentioned herein. Due to volatility within the markets mentioned, opinions are subject to change without notice. Information is based on sources believed to be reliable; however, their accuracy or completeness cannot be guaranteed. Past performance does not guarantee future results.