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Five Tips for Coping with Market Volatility
How you react to economic uncertainty can make a difference in your retirement preparedness. The following suggestions may help you stay more in control of your investments during periods of market volatility.
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Check Your Investment Strategy
Generally, a good diversification strategy will be split between stocks, bonds and other investments. It also will take into consideration how long you have until retirement (or until you need to start taking withdrawals) and your level of comfort when it comes to risk. Review your investment strategy regularly, and stick to it when markets get erratic.
Investing always comes with risks. By understanding your risk tolerance and investing timeframe, you can use diversification and asset allocation to create an overall investment strategy. Doing so can help to manage your risk exposure.
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Avoid Emotional Investing
When you start feeling anxious about the economic situation, remember the plan you have in place. Keep in mind that markets go up and down. The long-term performance of your account is what matters. Your investment plan can help you avoid making investment decisions based on how you feel about the current market behavior. A plan can also provide confidence that your investment strategy is right for you no matter the current market condition.
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Review Your Investments with a Professional
When news headlines that proclaim market slumps and economic woes start to worry you, contact a financial professional to get the whole story. He or she can answer questions about how market volatility affects your specific financial situation. A financial professional can also assist you in ensuring your investment approach aligns to your future financial goals and may also suggest ways to make you less susceptible to market changes.
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Don’t Give Up On the Market
When the market is in a downturn, it’s tempting to get out of investing altogether. However, this may not be the best decision. Financial markets rise and fall quickly. Before you know it, the investments you got rid of may rally and experience superior performance. History has taught us that knee-jerk reactions in a market slump often lead to regret when the market springs back.
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Consider a More “Hands Off” Approach
You may find that you lack the knowledge or time to manage your investments through different market conditions. If this sounds like you, consider taking more of a hands-off approach to investing.
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Target Date or Target Risk funds streamline the investment decision by allowing you to select one fund based on your target retirement date or tolerance for risk. These funds are prebuilt from a collection of funds and managed to achieve the outcome of the fund, making them a convenient choice for those who prefer a more “hands off” approach.
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You may also have the option to hire a third-party investment management company to handle your investments for you. A managed account option will rebalance your investment allocation as you reach different stages in your life and as the markets change. Discuss your managed account options with a financial professional.
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Log in to your account to see how your investments are performing or to see if your investment strategy is still on the right track.
Products issued and underwritten by American United Life Insurance Company® (AUL), a OneAmerica company. Administrative and recordkeeping services provided by AUL or OneAmerica Retirement Services LLC, companies of OneAmerica which are not broker/dealers or investment advisors. Provided content is for overview and informational purposes only and is not intended and should not be relied upon as individualized tax, legal, fiduciary, or investment advice.
Investing involves risk which includes potential loss of principal. The use of asset allocation or diversification does not assure a profit or guarantee against a loss.
Before investing in any product, carefully consider the investment objectives, risks, fees, and expenses. The product prospectus and underlying fund prospectuses contain this and other information. Read the prospectuses carefully before investing. Both the product prospectus and underlying fund prospectuses can be obtained from your investment professional or by writing to the issuing company.
Target Date Funds are designed for people who plan to retire and begin taking withdrawals during or near a specific year. These funds use a strategy that reallocates equity exposure to a higher percentage of fixed investments; the funds will shift assets from equities to fixed-income investments over time. As a result, the funds become more conservative over time as you approach retirement. It’s important to remember that no strategy can assure a profit or prevent a loss in a declining market and the principal value of the Target Date Funds is not guaranteed at any time, including the target date. Target Date Funds are designed to provide diversification and asset allocation across several types of investments and asset classes, primarily by investing in underlying funds. Therefore, in addition to the expenses of the Target Date Funds, an investor is indirectly paying a proportionate share of the applicable fees and expenses of the underlying funds. The principal amounts invested into these funds are not guaranteed at any point and may lose value.
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