How Retirement Impacts Your Investment Strategy
Volatility in stock markets in recent months – including several straight days of losses – has even the most secure investors feeling that their portfolios may be on shaky ground. But those who are retired or approaching retirement within the next few years feel even more concerned with the worst year start for markets ever. Those with a number of years to recover from losses are aware of market history providing confidence that markets will rebound over time such that their strategy allows them to ride out the weaker points on the curve.
Just how concerned should retirees and those preparing for retirement be? The fact is that when markets are up, everyone tends to feel happy with their holdings and prospective income. But consider that when your stocks are up withdrawals actually have a larger impact on your balance and the future of your investments. When the market is down, withdrawals have a smaller impact on your total prospects since over time, markets values will rise again. Keep your overall strategy in mind and remember that your total account will actually be liquidated over quite a long time, making small bumps in the road not terribly concerning.
During down market periods most advisors suggest their clients remain on course since their investment choices and decisions were originally based on sound advice and strategies that remain viable approaches for the long term. That being said, it’s always a good idea to re-evaluate your strategy and individual investments to make sure they still make sense as economic conditions change. This is true whether you engage the services of a skilled financial advisor or make your own decisions on retirement investments.
Day traders and investors with an eye on market volatility and trends may have a totally different view of the overall drop in market values, seeing this as opening opportunities to buy undervalued vehicles that they believe are positioned for quick turnaround or long-term growth. Investment strategy varies greatly even among day traders on what individual investment instruments are best for their financial future, and retirement planning is in truth no different – financial advisors and individuals execute a broad range of investment strategies depending on each individual’s financial needs.
Considerations that are unique to retirees and soon-to-be retirees are the fact that their investment portfolios may not have the benefit of time to recover from long periods of downward volatility. This warrants caution when considering the element of risks both in timing withdrawals, and also in day trading activity for retirees. Retirement planning is challenging for even the most prepared individuals. Weigh pros and cons carefully before proceeding with buy and sell orders that could impact your post-retirement lifestyle.
Cautions in Retirement Investing
Remember that losses in the market only impact your income if you actually cash out while the market is down. If you don’t need the assets immediately for living expenses ride out the storm and allow your portfolio to regain value.
If you have the financial stability and resources to take advantage of low market values, it may even be a good time to take advantage of such conditions to add shares or further diversify your holdings. Do your homework in researching current trends and indexes that can help turn your decisions into profits.
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Disclaimer: SureTrader Blog is not intended for U.S. persons. Stock information is not to be viewed as buy or sell recommendations.