Presented by Sara Frank-Hepfer, CFP®, AAMS®Fluctuations in your 401(k) or workplace retirement savings account can stir up negative emotions, making you want to hit the panic button. But in turbulent times, it’s more important than ever to remain calm and stay on course toward your long-term retirement savings goals.
Maintaining perspective
Despite recent market volatility, the U.S. economy is solid, and indicators look good for continued growth. Risks remain, particularly from abroad, as China’s growth continues to decline and both Europe and Japan face economic challenges. Overall, though, we are in a much better place than we were one year ago. Although they won’t last forever, low oil prices will likely act as an ongoing stimulus to the U.S. and global economies through most of 2016.
Managing your portfolio
A long-term perspective and diversified portfolio remain the best ways to take advantage of investment opportunities and hedge against risks, but staying the course is sometimes easier said than done. To ensure that your retirement portfolio is positioned to benefit from future market upswings, keep these tips in mind:
• Resist the urge to sell. Even though your 401(k) may have lost some value over the past few weeks, it pays to stick to your plan. Allowing emotions to drive your decisions could mean missing out on potential gains when the market stabilizes.
• Don’t try to time the market. When you stray from your well-thought-out plan to chase higher returns, your 401(k) account performance may get worse, not better. We know that past performance does not guarantee future results and that, historically, when it comes to the various asset classes, there is no discernable pattern of winners and losers. Because there is no way to predict next month’s or next year’s winners, you have a better chance of doing well by holding a wide range of investments and maintaining a long-term focus.
• Keep contributing to your 401(k). Although you may feel uneasy looking at your account balance right now, this is not the time to stop contributing to your 401(k) or other retirement savings vehicles. Doing so could mean leaving valuable employer-matching contributions on the table. Further, if you reduce your contribution rate, you also reduce your ability to benefit from the magic of compound interest.
Getting an expert opinion
It’s understandable to be anxious about how recent market fluctuations will affect your retirement goals. A financial advisor can help you feel more confident in your long-term investment strategy by reviewing your account and ensuring that your assets are well diversified.
If you have any questions or would like to discuss your strategy, please don’t hesitate to reach out to me at 517.351.8600 or at frank@financialtec.com.
Diversification does not assure a profit or protect against loss in declining markets, and diversification cannot guarantee that any objective or goal will be achieved.
Sara Frank-Hepfer is a financial consultant located at Financial Technology, Inc., 1500 Abbot Road, Suite 150, East Lansing, MI, 48823. She offers securities as a Registered Representative of Commonwealth Financial Network®, Member FINRA/SIPC. She can be reached at (517) 351-8600or at frank@financialtec.com.
© 2016 Commonwealth Financial Network®
