It’s been said that volatility is a tax that investors have to pay for harnessing the wealth-building power of the financial markets. But rationalizing market fluctuations doesn’t make them any less nerve-wracking, especially if you’re nearing retirement age. 

Some investors react to volatility like they’re living in the path of a hurricane. They board up the windows, gather the essentials, stay put, and hope the storm passes without hitting too hard. Others may get nervous and want to sell some investments and move the proceeds to cash. 

The truth is, if you have prepared appropriately for market volatility, then normal market fluctuations shouldn’t be as concerning. You should continue living your life and spending your money as you usually do.  

Now, not everybody has “prepared appropriately.” Here’s a three-point checklist to see if you have done the work necessary to keep your finances on track regardless of what the financial markets throw at us.

You Have a Financial Plan That Covers All Your Bases

No financial plan is totally immune to market fluctuations. But by diversifying your investments across stocks, bonds, and other financial vehicles, no single market event is likely to jeopardize your long-term goal. We also recommend having both long and short-term “buckets” for investing in various ways depending on your age, goals, and how close you are to retirement. 

Doing these things will give you confidence. It also provides flexibility to address potential problems or to take advantage of opportunities that might benefit your overall portfolio. 

Where you have the most direct control over your finances is your personal spending. If you’re retired, it’s always important that you spend within the boundaries of your annual withdrawal plan. Younger investors might consider increasing their planned savings contributions during a downturn, especially if they’re counting on that money for a home or auto purchase in the near future. 

In short: Sticking to your plan and living within your means are two of the best financial moves anyone can make during market volatility.

You Understand Your Relationship With Money 

A big focus of our Life-Centered Planning exercises is to make folks more aware of what their relationship to money is really like. 

For instance, early on in our process, we use interactive tools and discussions to identify how comfortable a person is investing in the markets. Some people are highly skeptical and think “the game is rigged.” At the other extreme are people who have a gambler’s irrational confidence in investing and love “laying their money on the line.”

Most folks fall somewhere in the middle. But market volatility can rouse some bad tendencies at both ends of the scale. Market skeptics might pull out their investments and shift too much portfolio weight to cash, bonds, CDs, and other low-yield options that can cripple their long-term wealth-building. Gamblers might see “buy low” signs everywhere they look and get in over their heads. 

Having someone in your life who understands your attitudes towards money is one of the biggest advantages of working with a fiduciary advisor. Always consult a professional who knows you, your history, and your goals before you let bad news or scary headlines distract you from a well-thought-out plan.

Your Focus is Long-Term, Not Short-Term

Investors who try to time their investments to economic signals are looking at market history through a dangerously narrow lens. The ultimate size of your nest egg won’t be determined by one week, one month, or even one year. True wealth is built up slowly, over decades of steadfast saving and investing, careful planning, and thoughtful rebalancing when necessary. 

So, don’t let any short-term market worries impact the Return on Life you enjoy from all your hard work and planning. Click here to connect with us and learn more about Life-Centered Planning so that you can enjoy your retirement with the money you have.


The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

All investing involves risk including loss of principal.  No strategy assures success or protects against loss.

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