When you are investing for retirement, there will almost certainly be times when the markets take a beating. And that can be rough. Seeing investment values drop is difficult, even for professional investors. However, as a long-term investor, your focus should be on continuing to contribute to your plan account. If history is a guide, there should be enough time for you to build your account balance back up and more.
Make Sure Your Portfolio Is Balanced
After a market decline, you may find that your portfolio has become unbalanced. For example, if stock prices have fallen, the percentage of your portfolio that is invested in stocks may be smaller than you originally intended. To rebalance, you would sell investments in other asset classes and purchase additional stock investments or direct a greater share of new contributions to stock investments until your account allocation is back in balance.
Put More into It
While it may not be easy to set aside more for retirement, even a small increase in the amount you are contributing each pay period can make a big difference in how much you’ll accumulate by retirement. Plus, by putting more into your account when the market is relatively low, you’ll be in a better position to benefit when the market recovers.
Use the Right Tools
Another way to build up your account balance is to choose investments that have the greatest potential for long-term growth. Historically, stocks have produced higher long-term returns than bonds and cash equivalent investments. (Past performance is no guarantee of future results.) So including stock investments in a portfolio is generally considered to be a wise strategy for long-term investing.
Having a well-diversified portfolio of stock, bond, and cash equivalent investments can help in a very important way. Different investment types typically do not perform the same way at the same time. If one investment type is performing poorly, losses in that asset class may be offset by steady performance or gains in the others.
Remember, building up your savings can help you have the retirement of your dreams. We can help with all of your retirement planning needs. Call us at 866.238.0082.
First Merchants Private Wealth Advisors products are not FDIC insured, are not deposits of First Merchants Bank, are not guaranteed by any federal government agency, and may lose value. Investments are not guaranteed by First Merchants Bank and are not insured by any government agency. This material has been prepared solely for informational purposes. First Merchants shall not be liable for any errors or delays in the data or information, or for any actions taken in reliance thereon. Any views or opinions in this message are solely those of the author and do not necessarily represent those of the organization.
