If the recent market volatility has you second guessing your investment strategy or whether you should stay in the market, here are some helpful points that could assist you in achieving your financial goals.
To help manage risk, consider diversifying your portfolio with different types of investments. Broadly speaking, investments such as stocks and real assets like agriculture and real estate respond well to growth – growing corporate profits, growing incomes around the world or in some cases overall population growth. Other investments such as bonds or certain guaranteed investments can help provide some stability to your portfolio when markets are volatile or to meet income needs in retirement.
You should review your portfolio and rebalance it periodically if necessary adjusting it based on prolonged market moves and your stage in life. For example, if we’re in a period when stocks have moved down for a prolonged period of time relative to bonds, then purchasing some additional stocks may be the right thing to do. As you move closer to retirement, or through retirement, generally speaking, increasing the proportion of your portfolio in bonds and certain guaranteed assets may make sense.
From time to time, you should revisit the amount of cash you have on hand for emergency situations. Having the right cash position and insurance, especially when markets are volatile, can help ensure you won’t have to sell your portfolio during market downswings.
Resist the temptation to stop systematic investments. Moreover, don’t let periods of high volatility make you to lose sight of your long-term financial goals or the opportunities that are created by investing in times like these. Having a well-thought-out financial plan and investment strategy can help keep you on course when the markets are in their most volatile period. Your financial plan should be designed to provide a clear roadmap for achieving a range of needs and goals – from paying monthly rent or mortgage and saving for college, to investing for retirement. A financial advisor can assist with your financial plan and investment strategy.
There are some important lessons from the global economic crisis of 2008-2009 that can help you cope with recent market volatility.
The material is for informational purposes only and should not be regarded as a recommendation or an offer to buy or sell any product or service to which this information may relate. Certain products and services may not be available to all entities or persons.
Diversification is a technique to help reduce risk. There is no absolute guarantee that diversification will protect against a loss of income.
Rebalancing does not protect against losses or guarantee that an investor’s goal will be met.
Guaranteed retirement products are sold by insurance companies and subject to the claims paying ability of the issuing insurance company.
TIAA-CREF products may be subject to market and other risk factors. See the applicable product literature, or visit www.tiaa-cref.org for details.
TIAA-CREF Individual & Institutional Services, LLC and Teachers Personal Investors Services, Inc., members FINRA, distribute securities products.