If you have time to wait on market recovery, experts say let it ride.
SAN ANTONIO — After another down day in the market, you may be among the many in a retirement fund funk. There are ways to hold onto some of your money through all of this market madness.
If you are freaking out about your 401(k), there is one important thing to keep in mind: it is a long-term account and the short-term movements shouldn’t matter too much.
Bill Dendy, a certified financial planner with Alicorn Investment Management said, “If they’ve got years to go before retirement, this is not a big deal for them. In fact, they should be joyous that they’re able to buy today at less than they were able to at a month ago.”
But what if you don’t have years to go until retirement and don’t have time to wait for the market to recover? Dendy told us, “That’s okay to be long-term market invested. But the money they need next month to meet living expenses, that should already be very visible in a safer account.”
Some ways to protect yourself in a down market…keep your debts under control and pay off small balances first. Build up your liquidity, and try to have at least six months of emergency savings on hand. Re-evaluate your job prospects and get a side hustle if necessary. And delay retirement if you can.
Dendy added, “For many people as they reach retirement, it may be the first time in their lives where they’ve had to striate their investment.”
Some ways to cushion your nest egg: Don’t put all of your dollars in one basket by diversifying your portfolio. Make sure your portfolio has a healthy mix of stocks and bonds. Invest in dividend paying stocks to give you a source of retirement income. And have dry powder so you can buy bargains.
Dendy said, “There may be a bigger discount coming, but nobody knows. It is on sale to what it was a month ago.”
Dendy says to keep in mind that the S&P Index is up 20% from two years ago, 90% in the last five years, and 140% in the last ten.
Also learn from your mistakes and take a look back at how you handled market drops in the past, and change it up the next time you think about moving that money.