Everybody loves a market that’s rocketing higher but when it heads south, people panic. In most cases there’s little reason to take drastic action but what if you’re close to reaching retirement? Here’s what to do.
1. Don’t panic!
We know what you’re thinking: “I need this money in a couple of years. It’s not just an investment account; It’s how I will support my family.” We understand but most market pullbacks are temporary and even healthy. Even if it’s more than just temporary, if your portfolio is allocated correctly, you probably won’t suffer crippling effects. What will drain your portfolio’s value fast is if you sell at the lows and watch the market rebound without you invested.
2. Allocate Correctly
Most Americans are behind on their retirement savings but that doesn’t mean that you should be heavily invested in stocks if you’re approaching retirement. Most of your balance should be in some sort of lower volatility fixed income investment that is more immune to market pullbacks.
3. You Might Find Buying Opportunities
The best investors don’t sell when things go south—they buy. They know that quality companies sometimes have stocks that fall with the market and those are buying opportunities. If you have cash sitting around waiting to be invested, market pullbacks are a great time. You can also find opportunities around earnings season. Use our upcoming earnings screen to see what’s on the horizon. It’s FREE!
4. Size up Your Financial Advisor
In every profession, there are high and low quality people. That’s certainly true of financial advisors. During times of market pullback you should hear from your advisor. They should tell you if it’s time to be concerned or not. If they’re concerned, they should advise you on actions to take. This is the time when your financial advisor earns their money. If you don’t hear from them, you might have the wrong advisor.
5. Cut Your Withdrawals
If you’re already drawing money from your retirement accounts, market pullbacks might require you to cut your withdrawals for a while. If you were planning a big purchase or trip around the world, that might have to wait until the market gains its footing again.
6. Know What You Own
Too many people don’t know anything about their portfolio. They think that it’s too complicated for them or since they’re paying somebody else to do it, they don’t need to be knowledgeable in their holdings.
Nobody cares more about your money than you do and your advisor is servicing multiple clients. They should be communicating with you but your account probably isn’t the most important account they have. Research your stocks, mutual funds, and other holdings. You can find all of the information you need on your stocks right here at WooTrader.
People are still understandably concerned any time the market suffers sustained losses but that doesn’t mean that we’re reliving 2008 all over again. Most pullbacks are temporary and healthy. Don’t panic and make sure you’re allocated correctly.