The markets took a big dip Monday morning, with the DOW losing over 1,500 points for the first time in a single day. Many investors, especially those close to retirement, are understandably nervous. But now is not the time to make rash decisions. What should you do during a market decline?
At times like these, it’s important to put current conditions into perspective. This is not the first time the market has taken a tumble and it won’t be the last. Over the past 60 years, there have been 15 occasions where the stock market has declined by 20% or more. These bear markets have lasted an average of 10 months and brought stock market values down an average of 29% (Source: Wall Street Journal).
While easier said than done, successful long-term investors know that it’s important to stay calm during a market correction. Market volatility has increased in recent years and the media can often make it seem like each episode is worse than the one before. In reality, volatility does not hurt investors, but selling when the market is down will lock in losses.
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At 1on1financial, we understand that you are likely concerned with the recent downturn. However, we encourage you to keep in mind that while the stock market may be down significantly, your portfolio is made up of both stocks, bonds, and other assets that are designed to work together to decrease overall volatility. It’s important to consider your specific portfolio, investment horizon, and circumstances when reflecting on economic events. As we experience market fluctuations, here are four essential actions to take.
Whether you’re new to investing or an experienced investor, it’s helpful to consult with an objective third-party. Human nature causes us all to act out of emotion when our accounts go down. As an independent firm, we put your best interests first. We seek to serve as a support system for our clients, helping them make informed financial decisions that aren’t driven solely by emotion.
If you are uncertain about the markets or wonder if you should make a move, please call us first. Together, we can discuss what is appropriate in terms of your immediate needs and long-term objectives. Sometimes, simply speaking with your advisor may help you feel more confident with your strategy and less concerned with the day-to-day market activity.
Monday’s correction wasn’t the first, and it won’t be the last. In fact, Deutsche Bank’s research shows that the stock market, on average, has a correction every 357 days. Market corrections are an inevitable part of owning stocks. While we don’t know for certain when the next correction will occur, you can prepare yourself and may feel more confident in your plan by speaking with our team.
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We hope that you feel confident in your long-term financial plan because you have chosen to partner with a financial professional that is looking out for your best interests. Your friends and family may not be so lucky and may be stressed during this market volatility.
We’re never too busy to help someone you care about. Feel free to share this article and invite your friends or family to call our office at 909-981-1720 or email email@example.com today.