Contributed by: Matt Trujillo, CFP®
Retiring in a poorly performing stock market can be scary, but here are some things to consider that may take some of the fear away:
Bear markets come and go. However, while they are occurring, they are almost always uncomfortable for investors.
Since 1950 there have been ten bear markets (defined as a 20% drop in major U.S. stock market indexes).
Fortunately, as proven by history, they are also temporary.
Investors can often weather the storm without changing their investment allocation much at all.
If you are compelled to make changes, do so incrementally – avoid panic selling and major reallocations if you can. Patience can pay off since there is usually a bull market in the not-too-distant future!
Source: First Trust
It is also important to make sure you meet with your advisor at least once a year to review your circumstances and ensure your cash needs will be met for the next 24 months. You should also always be reviewing your asset allocation to make sure whatever cash needs are on the short-term horizon are set aside in more safe and stable investments. It would help if you also had some growth assets so your principal could keep pace with inflation and maintain purchasing power over time.
Our team at The Center is always here for any questions or concerns you may have. Please reach out to us anytime; we're happy to help!
Matthew Trujillo, CFP®, is a Partner and CERTIFIED FINANCIAL PLANNER™ professional at Center for Financial Planning, Inc.® A frequent blog contributor on topics related to financial planning and investment, he has more than a decade of industry experience.
The information contained in this letter does not purport to be a complete description of the securities, markets, or developments referred to in this material. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Any opinions are those of Matt Trujillo, CFP®, and not necessarily those of Raymond James. Expression of opinion are as of this date and are subject to change without notice. There is no guarantee that these statement, opinions or forecasts provided herein will prove to be correct. Investing involves risk and you may incur a profit or loss regardless of strategy selected, including diversification and asset allocation. Individual investor’s results will vary. Past performance does not guarantee future results. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. Rebalancing a non-retirement account could be a taxable event that may increase your tax liability.