Markets are off to a volatile start in the New Year, on the heels of an erratic year in 2015. These swings can cause participants to be unsure of how to manage their retirement plan investments. Here are some strategies that can help you keep your plan on track to meet your goals.
Step One: Stick to Your Long-Term Plan
It’s a common reaction to want to pull out of the market during times of volatility and downturns, which often leads to buying high and selling low. This restricts an investor’s ability to participate in market gains. By creating a long-term investment plan and sticking with it, you can help reduce loss risk by holding investments long term. Consider your risk tolerance, time horizon, assets outside the plan, and financial goals.
Step Two: Consider the Bigger Picture
Time evens out the highs and lows of the marketplace, so keep a long-term perspective. Once you’ve made your long term plan, try not to let short-term fluctuations sway your investment decisions.
It has paid to stay invested in U.S. stocks during turbulent times:
Step Three: Understand the Benefits of Dollar Cost Averaging
Keep contributing to your workplace retirement plan. This allows you to invest regularly over time through market ups and downs. You’ll buy more shares when prices decline and fewer shares when prices rise. This strategy allows you to make the most of the economic downturns and help take your emotions out of investing. Keep in mind that dollar-cost averaging does not guarantee performance or protect against loss.
How can Aldrich Wealth help?
Aldrich Wealth LP helps our clients protect and grow their financial assets for the future, by helping them make smart financial decisions today. If you would like assistance in determining your retirement needs, please call Aldrich Wealth at 888-299-3102.