It is human nature to seek advice when things aren't going well or when an unforeseen event occurs. Often, people seek financial advice from a professional only when the stock market and their investments are experiencing turbulent times. Reactive decisions made during periods of stock market volatility may cause investors losses they can’t recover.
One such reaction may be an investor’s decision to leave their current financial professional and move to another who wants to change their portfolios' holdings during a market downturn. Moving investments during turbulent market periods can damage a portfolio’s long-term performance during a low portfolio valuation.
However, not all liquidations during a down market are harmful. Some liquidations may provide tax-loss harvesting opportunities or a repurchasing of shares at reduced prices.
Here are Five things to consider regarding your retirement portfolio before the next turbulent period arrives:
- Market swings are a sign of a healthy market that is working toward a market correction.
- Delay making sudden decisions to quit investing or 'go all in.' Continue investing using dollar-cost averaging to reap the rewards of low and high prices purchases over time.
- Your investment's time horizon may be over many years (20 or more years for a retirement portfolio) and not affected by a sudden drop in value over a short period. Consider how long your retirement portfolio will be in the accumulation stage; it has experienced many market swings and likely will have more.
- Short-term investments should be moved into cash and not the stock market if you think you will need them next year. · Evaluate your financial professional's performance during the stock market’s good and bad performance periods. If there are issues that can't resolve, the best time to change financial professionals (and your portfolio) is when the stock market and your portfolio are favorable.
Remember that the best time to make important financial decisions is during good times and not the turbulent times when your emotions can override good choices. If you have concerns about market volatility and your portfolio or your relationship with your financial professional, now is an excellent time to meet with them.
Have specific questions? Don't hesitate to reach out to me today
Wes Garner, CRPC
Principal Wealth Strategist
(281) 269-8669
wgarner@tdecu.org
Important Disclosures:
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial professional prior to investing. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and cannot be invested into directly.
Investing involves risks including possible loss of principal. No investment strategy or risk management technique can guarantee return or eliminate risk in all market environments.
This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax advisor.
All information is believed to be from reliable sources; however LPL Financial makes no representation as to its completeness or accuracy.
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