September, 2020
In your investing lifetime, you will live through periods of market volatility that may cause you to second guess your investment strategy. The level of volatility we’ve seen during the COVID-19 pandemic is rare.
Though downturns make investors nervous, a long-range perspective can help. Despite the current market volatility, the best advice is to look at the big picture and avoid any hasty decisions.
Stick With Your Plan
Don’t let emotions guide your decision making. Despite market volatility, the best advice is to stick to your long-term plan. The initial reaction to big ups and downs in the market might be to sit it out, but that can be the wrong move. It’s natural to question your investment strategy when the market gets rocky, but it’s nearly impossible to predict market outcomes.
Are you investing for 10, 20, or 30 years? Longer/ Viable investment strategies generally outlast volatility, which typically lasts days, weeks, or months. Although past market performance cannot serve as an indicator or predict future trends, the average bull market historically lasts 72 months, while the average bear market lasts 14 months.
Make sure your portfolio is aligned with your goals:
Short term: cash, cds, income replacement, emergencies
Intermediate term: education costs, home repair, weddings, retirement
Long term: accumulation goals
Ignore the Media
There are so many sources of information coming at you, it’s hard to cut through the noise. The difference of opinions on what to do can be overwhelming. This is the time to rely on your financial professional who understands your unique situation and can provide in-depth analysis and market monitoring for you.
A flexible investment strategy can allow you to take advantage of appropriate opportunities that may arise, as long as they are suited to your risk tolerance, time horizon, and personal goals. Your financial professional can help to ensure your money is working for you in the long term – regardless of what the markets are doing this week or next.
New for 2020:
Changes to IRAs – SECURE and CARES Acts
- Age for required minimum distribution raised from 70 ½ - 72
- Non-spouse beneficiaries need to take money within a 10 year window
- No required minimum distribution for 2020. Contact advisor or custodian to stop automatic distributions
What’s Next?
No one knows the future. Regardless of what may com, keep in mind that the ups and downs in the market are a typical part of the investing lifecycle. With a sound strategy in place, movement in the market can be anticipated.
Questions to Ask Yourself
- Should I accelerate 401k contributions during the downturn to take advantage of lower prices?
- Should I consider refinancing my mortgage or setting up a home equity line of credit while interest rates are low?
- How do I manage group benefits, rollovers, severance packages, stock options, health benefits and life insurance?
- Do I need to review my strategy to ensure it is in line with my current goals and objectives?
If you have questions about this article or want to discuss your financial situation, please contact us.
Securities and investment advisory services offered through Royal Alliance Associates, Inc. member FINRA/SIPC. Royal Alliance Associates, Inc. is separately owned and other entities and/or marketing names, products or services referenced here are independent of Royal Alliance Associates, Inc
1 TheBalance.com, March 24, 2020 2 Investopedia.com, February 19, 2020