You might be on the brink of a major life change – perhaps retirement is just around the corner, or your child is set to begin their college journey this fall. Suddenly, you’re confronted with a stock market that’s taken a significant hit, dropping roughly 6% in just the last week. Is it time to panic?
The Quick Answer
As long as you have a financial plan that guides your investments for short- and long-term goals, the decline shouldn’t be an issue. Most often, investing is used as a tool to meet these goals over a period of time, not making a quick buck in the market. So, instead of looking at how much your investments have decreased, what you should really be looking at is whether or not that has a significant impact on your financial future. It’s not about the economy; it’s about your economy.
Some Perspective On the Market
As bad as recent losses may feel to investors, it’s important to consider that the market is still up this year. In fact, the S&P 500 has increased more than 8% since the start of 2024. That’s a gain most investors are glad to see! In effect, the losses accrued through Monday only set the market back to where it was a few months ago.
Of course, if you’re a day trader who’s made a lot of bad bets or you’re terribly overexposed to stocks with your retirement account, this downturn will hit a lot harder.
Word of Caution
While it’s not necessarily time to panic, investors should be paying attention to the market and assessing your feelings during volatility. While you may be on track toward your goals, it could be time to meet with your advisor and assess your risk tolerance if you find yourself losing your cool over current market conditions.
The bottom line is that you need a plan on paper, on purpose to help you navigate whatever conditions the market may present. Remember to invest for the long haul and be sure to avoid quick reactions to negative circumstances. And don’t panic – emotions don’t make good financial decisions.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.
