We all can agree it’s much easier to continue to do something when we see positive results. Kids learn at an early age not to touch the stove or you will get burned. In the winter it’s easy to really want to drink hot chocolate as soon as you get it, but again, you’ll get burned. If you had waited for it to cool a bit, you would have been able to enjoy it without a burned mouth. It’s a similar strategy for investing for your retirement. You’ve probably heard of the investing strategy “Buy and Hold”, or “Buy Low Sell High”.
Wait for the market to cool off. Your chance of getting “burned” will likely be much lower!
The market works in cycles. Currently we are still experiencing a bull market, or up cycle. It’s very easy for one to keep investing when they keep seeing their retirement savings increase. However, what happens when we hit a down cycle, or bear market. Our instinct could be to take our money out, or switch to cash so we don’t get burned. Stick with your habits. You have a long way to go until retirement. If you pull all of your money out you may miss out on the upswing when it occurs, or worse could be burned with tax penalties.
It’s natural to feel worried and want to keep all your hard earned retirement savings “away from riskier investments”. The market is not risk free. You should actually keep investing just like you did when the market was climbing. For example, if you had kept investing through the downturn of 2008, the money invested money, most likely, would have tripled right alongside the S&P 500. Stick with your habits. You’ve got to think long term. Even if your sixty years old, your account will be there for you when you’re eighty. Talk with your adviser. Find a tolerable amount of risk for you. Above all stick with you plan! You will find, more often than not, sticking with your habits in hard times can pay the best dividends of all.
This week was special on the Let’s Talk Future show. We talked with Orlando Chief of Police John Mina. To our interview with him, any of our other guests, or simply get some more advice on how to plan for your retirement follow the link.
“Someone’s sitting in the shade today, because some planted a tree a long time ago.” – Warren Buffet
The information contained in this blog does not purport to be a complete description of the securities, markets, or developments referred to in this material. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Any opinions are those of Michael Clark and not necessarily those of Raymond James. Expressions of opinion are as of this date and are subject to change without notice. There is no guarantee that these statements, opinions or forecasts provided herein will prove to be correct. Investing involves risk and you may incur a profit or loss regardless of strategy selected. Every investor’s situation is unique and you should consider your investment goals, risk tolerance and time horizon before making any investment. Prior to making an investment decision, please consult with your financial advisor about your individual situation. The S&P 500 is an unmanaged index of 500 widely held stocks that is generally considered representative of the U.S. stock market. Please note direct investment in any index is not possible. Raymond James is not affiliated with John Mina.