You may be nervous, but you don’t have to worry as much as you might think.
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If you’ve been following the stock market lately, you might be pretty disappointed to see this number. The market has been volatile since the outbreak of the Iran conflict. Also, if you check your IRA or 401(k) balance now, you may see fewer numbers on your screen than at the beginning of the month.
It’s natural to be concerned about saving for retirement at a time like this. But there’s one important thing to know here.
Market volatility is not uncommon
It’s easy to feel anxious when you see the value of your investment portfolio declining. But remember, while frustrating and scary, stock market volatility is actually normal.
Now if you are in If you’re tapping into retirement savings, it’s important to adjust your withdrawal strategy if the market doesn’t cooperate. That might mean temporarily cutting back on spending or, if possible, selling assets that haven’t declined in value to turn them into cash. If you have extra cash, now might be a good time to spend some of it.
But if you haven’t retired yet and aren’t using your savings to generate income, you don’t have much to worry about, especially if you have many years of work ahead of you. Unless you panic and sell your investments, your portfolio is very likely to recover over time.
It’s best to do nothing
When the stock market is volatile, you may be inclined to check your IRA or 401(k) plan balance more often. Please stop. Really. There’s no reason to do so.
If you keep checking your balance every day, you’re only giving yourself reason to worry. And think about it this way. If your balance can drop significantly overnight, it can also increase your balance significantly overnight. So why should we endure the torture of seeing such a waterfall?
In fact, the absolute best thing to do when the stock market is down is to do nothing.
Remember, if you sell the stock at a lower point, your loss will only be locked in. If you leave your portfolio alone, temporary losses tend to resolve themselves.
Not only that, but you shouldn’t let recent market fluctuations prevent you from continuing to fund your IRA or 401(k). In fact, it’s good to buy stocks when they’ve recently fallen.
Being a retirement saver and investor during a time of significant market volatility is not easy. But if you leave your portfolio alone and commit to continuing on that path, you’ll be in a much stronger position to come through this plunge, and others like you, unscathed.
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