WHEN THE MARKETS ARE DOWN, ARE YOU?

Between soaring consumer prices, rising interest rates, and recent market volatility, you may be concerned about what may happen next. News headlines don’t necessarily correspond with the performance in your portfolio, especially on a long-term basis. Chances are, it may not be as bad as you think.

It’s important to be proactive and focus on the things you can control. Take a close look and see what you can do in the short term to potentially benefit your retirement strategy over the long term. Here are six actions you can take if the markets are getting you down:

Meet With Your Financial Advisor

At Kletschke Wealth Management Group, we listen intently to our clients and seek to understand what may have changed in their lives. Only then do we educate them on how the markets fit into their investing mindset and provide options that may be appropriate. We seek to remove any emotions from the discussion so you can make the most informed decisions moving forward.

Create a Plan Your Emotions Can Handle

There is no way to accurately time the market. To help manage your emotions, we recommend dollar-cost averaging to many of our clients who are still funding their retirement. This involves investing a fixed amount of money regularly – that way you’re buying fewer shares when markets are up and more shares at a discount when markets are down. Everyone likes buying things on sale! The beauty of this strategy is that it is designed to help you avoid making bad decisions, such as the natural tendency to stop investing in a weak market.

Diversify Your Portfolio

If you buy one stock, the day-to-day experience can be pretty volatile. If you buy 20 stocks, the individual returns usually move in different directions on a daily basis and may offer a smoother performance experience. Diversifying within and across asset classes, such as stocks, bonds, cash, and alternatives, doesn’t guarantee you’ll make a profit or protect yourself against loss, but it can help manage your risk and your portfolio’s volatility.

Stay Invested

In volatile markets, it may be tempting to simply pull your money out and wait until things settle down. However, if you missed one of the top 30 trading days over the past 20 years, the cumulative S&P 500 return would be almost flat! The S&P 500 Index had 71 positive years of return between 1926 and 2022, and those years averaged 21.3%. During that same time period, there were 25 negative years with the average return of -13.2%.

Be Patient and Flexible

Most likely, you have an emergency fund to help you get through periods of financial shock. When you are heading into retirement, we recommend a cash or cash-like buffer that could cover one-to-two years of spending needs. Having an alternative source available to fund expenses can be particularly helpful in a down market so your investments have time to recover. You might also consider working longer to pay down any debt and increase your cash reserves. Additionally, waiting to claim Social Security benefits will give you a higher benefit amount throughout your retirement.

Ask For Help

If you want to evaluate your retirement plan going forward, contact Kim and Korey of Kletschke Wealth Management Group-Stifel to discuss your options. Being prepared for the future and periodically reassessing where you stand with your financial goals can help keep you on track toward a successful retirement through market ups and downs.

Kletschke Wealth Management Group
700 4th Street, Suite 100
Sioux City, Iowa 51101
(712) 252-6931
[email protected]

Stifel Investment Strategy via Bloomberg, as of April 30, 2022 2 The Standard & Poor’s 500 Index is a capitalization-weighted index that is generally considered representative of the U.S. large capitalization market. Index returns include the reinvestment of dividends but do not include adjustments for brokerage, custodian, and advisory fees. Indices are unmanaged and are not available for direct investment. Past performance is no guarantee of future results.

Diversification and dollar-cost averaging do not ensure a profit or protect against loss. For dollar-cost averaging to be effective, you should consider your ability to continue investing during periods of falling prices.