Sound Investors Keep an Eye on the Long-Term

Your favorite team can go through winning and losing streaks and so can the stock market. You need to be patient and keep your eye on the goal — retirement.

Market volatility, corporate fraud, mutual fund scandals and war — these events can make us worry about our finances. While these events are important, it is also important to keep perspective and make your retirement investing decisions based on sound principles and good information — rather than fear or worry. ¹ Do not change your investments simply because of expected day-to-day volatility. Remember, a retirement plan is a long-term investment. So, stay the course.

Buy low, sell high

This is what every investor aims to do, but the truth is that most end up doing the opposite. Why? Emotions. During a slowdown – and the recession that often follows — many investors react with anxiety and then fear by getting out of stocks in favor of relatively “safe” fixed income investments.

Then, when the market begins to recover, these same investors react with hope and excitement and jump back into the stock market at the worst possible time — when stocks are going for higher prices.

As a result, they are missing out on long-term growth potential.

Why staying invested may increase returns

Stocks sometimes rise in short, unanticipated bursts. Investors who attempt to time the market often miss these increases and their returns could suffer.

The chart below shows the impact of being out of the market at the wrong time and missing the potential, single-day increases. Over the long run, staying invested can be the most rewarding strategy. Work with your financial advisor to select an asset allocation strategy that reflects your age, risk tolerance and time horizon, (length of time to invest).

Calculate your retirement income goal and contribute as much as possible!

1 Investments will fluctuate and when redeemed may be worth more or less than when originally invested. Auto rebalancing is not a substitute for investment advice from a financial advisor.

2 Source: 2018 Retirement Confidence Survey. Employee Benefits Research Institute and Greenwald & Associates.