Reacting to Volatility Can Hurt Performance

It is normal to worry about your retirement and financial markets.  The key is to have a plan to handle market volatility in advance.  You don’t want to get emotional and and change your plan in the middle of a short-term crisis.

Here are some key thoughts:  Reacting to Volatility Can Hurt Performance

1. Know that market volatility is normal.  See my previous blog.
2. Make sure that you are not taking too much risk in your portfolio.  Do you have too much money in stocks?
3. If stocks were to lose 20% to 40% of their value in a short period of time, would you be willing to rebalance and buy more stocks?
4. Know that any money you have invested in stocks should not be needed in the next 7 years.
5. Don’t try to time the market.  If you were invested in the S&P500 over the 43 year period ending in 2012, your $1,000 grew to $58,769.  But if you missed just the best 25 days out of over 10,000 days, your $1,000 only grew to $13,999.
6. Stick to your plan.  Avoid panicking.  Rebalance on a regular basis.

If you need help, give us a call.  Your retirement will thank you.

Find out Why DFA may be a better solution for your portfolio than Vanguard Funds, American Funds or Fidelity Funds.

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If you have over $500k in a portfolio and would like a free 2nd opinion about your strategy, give us a call.  Your retirement will thank you.

All the best,

Todd