Like a roller coaster ride, keeping up with the constant change in the stock market can be an intense experience. And, although those periods of market uncertainty can be unsettling, the good news is that investors who stay the course and continue investing tend to do better over time. The key is to stay calm and stick to your long-term plans.
Consider the Big Picture
Sometimes, we forget that what’s happening in the market today is really just a snapshot in time. History has shown that even after a slump, the market recovers. Even better, given the lower stock prices, a down market could be a good time to add to your portfolio. You’ll likely be in a good position to take advantage of future gains, especially if you don’t plan to cash out your investments for years.
Turn Off the Noise
Resist the urge to make investment decisions fueled by emotion or the day’s headlines. Stay focused on your goals and how long you have to achieve them. Here are some ideas to help you follow or tweak your plan calmly:
- Assess your goals. Consider how long you have to achieve your goals. What do you hope to accomplish in 5, 10, 20 years? How long do you have until retirement? If your goals need to be tweaked or you need to cash out some investments sooner than planned, be sure to talk to a financial advisor.
- Review asset allocation. Review how much you have in stocks, bonds, ETFs and cash. Is your portfolio still a good fit based on your age, goals and risk tolerance? If not, rebalance it to stay on target.
- Continue to invest. Your goal is to grow your money, and investing is still more likely to yield higher returns than traditional savings options. It can be tempting to sell at a loss when markets are low, and some of us wait too long on the sidelines and miss a window of opportunity. If you’re concerned about investing at the right time, you could dollar cost average your investments, which is investing smaller amounts at regular intervals, as opposed to investing a single lump sum at one time. By spreading out your payments, you can take advantage of market corrections and discounted pricing without having to try to figure out the optimal time.
- Continue contributing to your future. Keep making regular contributions to your retirement plan. Prioritize these contributions as part of your monthly budget, so you’ll continue growing account balances without even thinking about it. And, keep in mind—participating in an employer-sponsored retirement plan or contributing to an IRA provides you certain tax and other advantages.
Sometimes you just need some reassurance that you’re on the right track. Whether you prefer a do-it-yourself approach to investing or personalized guidance from an advisor, Navy Federal Financial Group has a variety of investing tools and resources to help you make sound choices.