With the recent market volatility, it’s understandable for you to be concerned about your investments.
Volatile markets can make you wonder if you’re on track to meet your retirement goals. Don’t be discouraged and most of all, don’t panic. Instead, be proactive! Consider the following steps you should be taking in both up AND down markets:
1. Review Your Portfolio. Know your investment mix and be sure you are invested in the appropriate asset classes (based on your risk tolerance and time horizon to retirement). Times like these reinforce the need to diversify. (While diversification does not guarantee against loss of principal, it can help spread your risk among different asset classes and market segments.)
2. Check Your Contribution Rate. How much you contribute each month can directly impact how much you will have at retirement. Have you done a retirement needs calculation? Do you know how much you should be contributing each month to reach your goal? Are you increasing that amount each year or more often based on your income and age?
3. Rebalance. This will readjust your portfolio back to your original investment strategy attempting to “sell high and buy low”. Essentially, when you rebalance, you tend to sell some appreciated assets and purchase others with lower valuations. Regular rebalancing (as a rule of thumb, at least once a year) may increase the overall return of your portfolio over time.
4. Consult with a Professional. Don’t go it alone. Financial planning resources are available through our retirement plan consultant, Rathbone Warwick Investment Management. Call (208) 297-5445 or email [email protected]com.
Remember, staying invested in times of market turbulence will help you participate fully in potential market gains. While there is never any certainty in the market, it is worth noting that some of the sharpest market declines were followed by steep rebounds. History has taught us that volatility is to be expected. The implications surrounding the current turmoil should call on plan participants to focus on what they should otherwise be doing on a regular basis.