If there's one piece of advice that simply cannot be overestimated, it is the value of saving for retirement. The sooner you start saving for retirement, the more like you are to have enough money over time to enjoy a comfortable future free of financial worry and emotional stress. However, as you watch your nest egg grow, you will inevitably worry about the stability of your investments. In this blog, you'll learn about three reliable ways to help guard your retirement accounts from the volatility of markets.
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Investing can bring out a lot of emotions in people. Watching the market go up and down over time can drive you crazy, and lead you to make foolish decisions such as selling off large volumes of shares when the market dips. In reality, you are better off staying the course during rough times and waiting for the market to rebound. The best way to control your emotions is to work closely with your financial advisor.
An experienced financial advisor can provide you with the insight needed to remain calm when the markets become volatile. Rather than selling all your shares, an advisor offers a steady hand, and would likely advise that you stay the course according to your financial plan.
It is important to set limits on your investing so that you do not put all of your eggs in one basket, so to speak. You need to keep a healthy balance of investments and cash on hand. Also, when you meet with your financial advisor, you need to set limits on your investing tolerance and levels. Are you willing to put your money into high-risk, high-reward plans, or would you prefer a moderate-to-conservative approach? You must understand your risk tolerance and set limits on how much of your money is invested, and where it goes.
The best thing you can do to help protect your retirement fund is diversify your allocations. If you allow all of your money to be invested in a narrow set of industries or markets, you risk losing a sizable chunk of your investment if that industry suffers a sustained dip in production and performance.
For example, you don't want to invest too heavily in stocks and ignore bonds. A better approach would be to allocate your investments across stock and bond markets. These two markets never move in sync with one another. There are periods where stocks outperform, and periods when bonds outperform. If you fail to diversify your investments, an imbalance is created that leaves your investment open to volatility.
Guarding your retirement funds against volatility is important if you want to reach your retirement with enough money set aside to enjoy your Golden Years in comfort. Following the advice provided above, you'll find it easier to protect your retirement accounts from the volatility that is guaranteed to occur over the course of time. Contact us at Manhattan Ridge Advisors today to make sure your retirement plan is on the right track.
Diversification and asset allocation do not guarantee a profit nor protect against loss in a declining market. They are methods used to help manage risk.