During a market downturn, it’s crucial to remind yourself of your financial goals. What are you investing for? How long before you need to start withdrawing cash from your investment account? Your goals, not a temporary market downturn, should inform the bulk of your decisions. Having money in the stock market is the means to an end for most people, not an end in itself.
Therefore, it can be advantageous to sell and reposition when the market isn’t at its hottest. However, this decision isn’t emotional – it’s strategic. For example, if retirement is around the corner or your child is starting college soon, acquiring bonds instead of stocks can help preserve your hard-earned funds. Additionally, it can provide modest returns, even as you begin withdrawing from the account. While you may miss out on the higher growth potential of stocks, bonds are more likely to keep your account steady once you need the money.
From the time you begin investing until you retire, it’s vital to recognize your risk tolerance. When you invest according to your level of tolerance, you’ll experience less stress. Of course, your portfolio will fluctuate. But investing according to your own preferences instead of outside pressures like the habits of friends and family will help you stay calm head in the midst of a market downturn.
While a market downturn will most likely take a chunk out of your investment account, your response to a bear market is critical in keeping your investments going. Instead of panic-selling that results in further loss, you can adopt the long-term strategy and reallocate your assets based on your financial goals and timeline. Also, remember, the market has always rebounded from past downturns.
A financial advisor can help you make wise moves during a market downturn. Finding a qualified financial advisor doesn’t have to be hard. Mr. Rani Jarkas is a highly experienced and accomplished financial services executive, with over 23 years of international banking experience at Cedrus Investments. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
