The most noticeable impact market cycles can have on your retirement is in regard to income distribution. Understanding the Impact of Market Cycles
We’re here to help you make the most of each situation to maximize your returns long-term. Market downturns (and upswings) are par for the investing course. Remember, the market moves up and down daily. Of course, we update, re-balance, and diversify your portfolio ongoing to make sure you stay on track to reach your goals, but if a market downturn has you worried, we’d be happy to go over your financial plans with you at any time. We are here to help you stay even-keeled and level-headed when major and minor events threaten your cool. Your financial advisor is here to help you with more than just investment management, tax planning, and retirement planning. Lean on the Help of Your Financial Advisor As long as your advisor is re-balancing and speaking with you about how they are handling your portfolio during the downturn, it’s unlikely there is much needed from you-except, of course, your trust in the process, the plan, and the long-term goals your advisor set up for you. As discussed earlier, we can’t predict market volatility – and we certainly can’t control it – but we can understand that its disruptions are temporary and won’t result in permanent loss. There are some aspects of our financial lives that we can control with our actions, and others we cannot. This is often all that is needed to restore a sense of peace and confidence in the financial plan. And of course, connect with your financial advisor to discuss your concerns. So, if you feel the noise in the media tempting you to make a financial move you might regret, just tune out the noise. But no matter how diligently we watch the headlines, none of us can control what will happen with the stock market.
The more you buy into the headlines, the more emotionally affected you may be by them. If fear prompts you to sell, you could miss the upside. Just consider those who sold at the bottom of the March 2020 COVID-induced drop and missed out on the miraculous, V-shaped recovery we saw over the next two years. Remember Big Dips Can Precede Large SurgesĪnd, because the market has some of its best days right after some of its worst, most investors miss out on the recovery and end up re-buying similar assets at a higher price-plus the liability on tax events they may have triggered by liquidating their assets. The thing is, though, that we never know when or where the bottom is, nor do we know when it will recover. Panic-selling is when you sell your assets when values are down to try and avoid further loss, with the intention of “jumping back in” when the market has recovered. Some of the costliest mistakes investors make come down to one thing and one thing only…their emotions! If you have a sound investment strategy, there’s no reason to “jump ship” in a downturn.
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