Keep a Steady Hand
Have your eye on retirement but spooked by market volatility? Keep calm, no matter what the headlines say.
by Jill Lupine


At the start of the New Year, it seemed investors were all smiles, seemingly incapable of making a wrong move, financially speaking. Consider the environment then: a rising tide of positive sentiment, driving unprecedented upward surges in the stock market; low unemployment, with prospects of plenty more U.S. job opportunities to come; optimism over an environment of decreased regulation and corporate and individual tax cuts, likely to add even more dollars to companies’ bottom lines and employees’ paychecks.  All of this combined to mean one thing: Investors had more money to funnel toward their retirement.  

Less than six months later, a yo-yo-like stock market—bullish one day, bearish the next—suggests many investors are now listening  to a different narrative. While the outlook is hardly all gloom and doom, recent volatility seems tied to anxiety investors may be feeling over the prospect of a trade war between the world’s two largest economies, the United States and China.  

What can investors do about it? Markets will  always be prone to volatility. Even so, wisdom from those who know best—locally based financial advisors—may offer some additional guidance. ?

Don’t go it alone. Even if you’re paying close attention, having a competent, knowledgeable and creative financial professional on your side should help you manage your money  more effectively. Why? Because these individuals will likely have ample resources at their disposal—including legal, accounting and estate planning experts— and will consider other aspects of your life that  may affect not only your retirement plans but also your legacy. Some investors  prefer to partner with those who have put in the time and effort to earn the professional designation of Certified Financial Planner, or CFP®.  

Diversify. The adage “Don’t put all your eggs in one basket” certainly applies, meaning investors may consider broadening their portfolios to pair stocks with investment vehicles that should continue to perform when the stock market isn’t firing on all cylinders—namely, bonds, cash and/or precious metals. Also, investors may be well served by thinking of their money in terms of “buckets,” according to Joel Goodhart, founding partner of BIREfinancial in Plymouth Meeting. By this, he means think of the money you need five years from now, 10 years, 15 years, 20 years down the line and so on, including the money you intend to leave to your heirs.  “The money you need in 20 years had better be aggressively invested,” Goodhart says. “The money you need on Thursday had better not be.”   

Take advantage of employer plans. Whether or not you choose to partner with an advisor, an employer-based retirement plan— 401(k), 403(b)—may be one of the best ways to save for the future. For individuals without access to an employer plan, consider investment vehicles such as Roth IRAs.  

Hope for the best, plan for the worst. Investors should always consider the “what-ifs.”  In other words, have enough saved to weather any downturns in the market, but also plan for events beyond your control—say, if the economy falls into another prolonged recession or a family member becomes ill and needs to reallocate funds away from retirement and toward long-term care. For the latter scenario, a long-term-care insurance policy may help to safeguard the amount you have saved in a so-called “nest-egg account.”

Above all, keep calm. Volatility makes investors nervous, and when investors get nervous, they tend to react emotionally—especially when it comes to those who are nearing the end of their  accumulation years. Forty-year-olds can deal with dramatic market swings, but it’s a different story for investors who are on the doorstep of  65. “Money and emotions don’t mix too well,” says Dan Hernandez, CFP®, a financial advisor with Lincoln Investment, which is headquartered  in Fort Washington. “I always tell people that the market doesn’t go up by itself.”

One advisor’s two cents: Take a good, hard look at your risk tolerance and long-term goals and make sure your investment strategies are aligned with those goals. Then, plan accordingly, no matter what kind of daily news is coming out of Washington, D.C., or some other capital across the globe.

Published (and copyrighted) in Suburban Life Magazine, April 2018.