Stay the Course
The first half of the year has been very trying for investors. Higher inflation numbers and the fear of a recession has investors wondering what to do. Just as trees cannot grow to the sky, markets do not only go up. If you have an investment plan in place that has been working DON’T PANIC!!
Investors should not suddenly try to shift investments in a down market. It might be tempting to pull your money out of stocks and hide in safe havens until it’s time to get back in. The reality is there is never a clear reentry signal. In fact, the market is forward looking and by the time everything looks good you will have missed much of the rebound and recouping any losses will take longer.
According to JP Morgan Asset Management, over a 20-year period, missing the 10 best days in the market results in annualized returns that are roughly half of what you would have gotten had you stayed the course. And those best days tend to cluster within two weeks of the worst days.
A move that seems safe at the time may prolong your misery. Instead during troubling economic times examine your spending, cut back where you can and consider how to supplement your income. If you are worried about how long your savings will last plan to work for as long as possible if not in your main career, then in a part-time job.
While the value of your investments fluctuates, they continue to generate income. Pre-retirees should focus on saving with an eye on income generation for retirement, while retires should remain confident in their investment plans
Contributed by Gracefully Greying Sponsor Robert Sinnaeve, CFP® SS&H Financial Advisors, Inc.