TIAA-CREF Investment Insights
Dramatic changes in financial markets – particularly steep drops in stock prices – may cause you to question whether your investments still meet your needs. Many investors wonder how market volatility will impact their financial goals, such as funding retirement, college education, or a home purchase.
Sudden market changes can be an opportunity to reassess whether you have the right mix of investments to achieve your goals, while tolerating the market’s inevitable ups and downs. As a general rule, it’s better to avoid making abrupt changes to your investment strategy in response to short-term market shifts. Remember, selling during a downturn will lock in losses and could mean missing an eventual market upturn.
Here are five things to consider when confronting market volatility:
1. Do you have the right financial plan and investment strategy?
2. Lessons from the bear market of 2008-2009
3. Diversification3 can help protect your portfolio from market volatility.
4. Market timing – jumping in and out of the market – is a losing strategy.
5. Periodic rebalancing4 helps you to stick with your long-term investment strategy.
The information provided herein is as of August 11, 2011.
1 Money market funds are not guaranteed or insured against losses.
2 Returns shown are based on a stock index, not actual investor returns. Index performance does not include investment fees or transaction costs.
3 Diversification is a technique to help reduce risk. There is no absolute guarantee that diversification will protect against a loss of income.
4 Rebalancing does not protect against losses or guarantee an investor’s goal will be met.
The material is for informational purposes only and should not be regarded as investment advice or 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.
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, Teachers Personal Investors Services, Inc., and Nuveen Securities, LLC, Members FINRA and SIPC, distribute securities products.