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MARKET VOLATILITY AND THE IMPORTANCE OF STAYING THE COURSE AT DIFFERENT AGES


INSIGHTS FROM EXPERIENCED FINANCIAL PROFESSIONALS.

When you invest in the stock market, you want to see growth, but unfortunately,
in most cases, investments do not grow all the time. Inevitably, the market goes
up and down, and to safeguard your potential for long-term growth, you need to
understand the importance of staying the course through market volatility.
However, you also need to adjust your approach to investing at different ages. 

Staying the course through market volatility has different implications at ages
20, 30, 40, 50, and into retirement. Check out these tips. 

20S TO 30S

At these ages, you should be actively saving for retirement. By investing early,
you have the opportunity to amass more wealth than you do if you wait until you
are older. When choosing your investments, keep your personal risk tolerance in
mind, but don't necessarily sell funds that drop in value. At these ages, you
don't need the funds for another 30 to 40 years, and as a result, you have the
ability to ride through market volatility. Typically, at these ages, the best
course of action when investments drop is to just do nothing. 

40S TO 50S

At these ages, retirement is looming on the horizon, and ideally, you should be
investing as much as you can. Even at these ages if your investments drop in
value, you shouldn't necessarily sell. But you should consult with a financial
professional and make slight changes as needed. 

Keep in mind that while the market grows at an average of 7.2% per year,
research indicates that the average investor only sees 5.3% growth per year —
analysts speculate that this discrepancy may be due to investors selling or
cashing out when the market drops. 

60S TO 70S

At this point, you should reach out to your portfolio advisor and make sure that
you are ready to make the leap to retirement. As a general course of action,
your investments need to be lower risk during these decades of your life, and
your cash reserves should be higher. As a general rule of thumb, you should have
at least two years of cash reserves in place. This gives you the flexibility to
ride out drops in the market. Typically, when the market drops, it takes about
two years to correct. 

RETIREMENT 

Now you need an investment strategy that helps you maintain your retirement
funds. To deal with market volatility and to outlast downturns in the market,
you should have five to 10 years of cash reserves or liquid investments in
place. Depending on your financial objectives, you may want to replace high-risk
investments with stable and predictable investments such as CDs. 

BEST PRACTICES FOR ALL AGES

Regardless of your age, you should keep these tips in mind during times of
market volatility:

 * Strengthen your portfolio with high-dividend and value stocks

 * When investing during a bear market, don't rush. Ideally, you want to wait
   until the market bottoms out.

 * Increase your cash position to help you weather volatility.

 * Actively monitor financials.





 

The opinions voiced in this material are for general information only and are
not intended to provide specific advice or recommendations for any individual
security. To determine which investment(s) may be appropriate for you, consult
your financial professional prior to investing. All information is believed to
be from reliable sources; however LPL Financial makes no representation as to
its completeness or accuracy. Investing involves risks including possible loss
of principal. No investment strategy or risk management technique can guarantee
return or eliminate risk in all market environments. LPL Financial
Representatives offer access to Trust Services through The Private Trust Company
N.A., an affiliate of LPL Financial.  LPL Tracking # 1-949921

20% every 3.5 years and 7.2% growth vs 5.3%:
https://www.capitalgroup.com/individual/planning/market-fluctuations/staying-the-course.html

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CAP COM Financial Services, LLC. - 4 Winners Circle - Albany, NY 12205
Phone: 518.782.0209 | 800.688.1045 - Fax: 518.782.5433

Securities and advisory services are offered through LPL Financial (LPL), a
registered investment advisor and broker-dealer (member FINRA/SIPC).

Insurance products are offered through LPL or its licensed affiliates. CAP COM
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and not affiliates of CAP COM Federal Credit Union or CAP COM Financial
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