I have been receiving many calls in the past week regarding the volatile market. Some people want to get out of the market completely and others want to stop their systematic investing until the market calms down. As a financial adviser, my job is to help you to stay the course and not react to the events that are currently causing the market swings. If you are properly invested for the long term, and do not need to withdraw your money over the immediate future, it makes sense to stay invested. If you have money that is not invested, consider buying stocks "on sale". It does not make sense to sell when the value is down, and it can be a good time to invest while prices are low.
If you consider what happened when the global stock market dropped in late 2018, people who stayed invested fared much better than people who went to cash on Christmas Eve and reinvested on January 2. The same held true during the last recession. People who stayed invested and did not get out and re-invest when prices were higher fared much better.
It is important to have a diversified portfolio that can help you weather these volatile markets. If you are nearing retirement, as long as you have two to three years worth of investments that you do not need to sell, you do not need to react by selling in a down market. It is important to determine your risk tolerance and to look at the time horizon you face when determining the correct asset allocation for your portfolio.
The markets are back up this morning, but who knows what will happen over the next couple of weeks. It is important to stay calm, and if you are in the proper allocation, to stay the course. It is a great time to meet with a financial adviser to review your current portfolio, and to make sure you are comfortable with your risk tolerance when the market drops.
Please contact me if you would like to discuss your current financial situation, and to see if your current asset allocation meets your needs for the long term.