4 Things to do During Market Pullbacks and Corrections

Thank you, Pexels.com

Thank you, Pexels.com

Market corrections and pullbacks can be unsettling for most investors. Knowing some terminology will help you get a handle on the situation. A market correction is when there is decline of at least 10% off of the 52-week high. A pullback is a sharp drop or reversal of upward momentum and can continue for some time. You cannot control the ups and downs of the markets, but you can do a few things to alleviate the feelings of frustration and helplessness. Start by taking a breath, and if needed, call your financial planner for a chat.

First, ignore the media hype – keep in mind that it is just hype. Wild headlines about market gyrations sell stories and give talking heads something on which to opine.

Second, do nothing! That’s right, do nothing. If you have a solid financial plan and have been keeping an eye on your asset allocation, you likely need to do nothing. You and your financial planner should be monitoring your plan and asset allocation on an on-going basis. If you need reassurance, give your planner a call and talk to them about how you are feeling. Your financial planner may feel what you feel. After all, they are also involved somehow in the investment markets and their own retirement and savings are affected to some degree.

Third, check with your financial planner and see if the market downturn is a good time to buy. Chances are it is.  A correction or pullback can be a good time to add to your diversification whether you are purchasing individual stocks, mutual funds, or bonds. Do not buy a stock, bond or fund just because it dropped in price; work with your planner to make sure it fits into your overall investment plan and goals.

Finally, if you are older and approaching retirement, you and your financial planner should have already planned your liquidity position several years before your retirement. You want to make sure you have appropriate cash holdings, fixed-income and equities that match your retirement goal.

Keep in mind that time and volatility work to your advantage when it comes to long-term financial planning and investing, so stay the course! A market downturn or correction may be a great time to add to your holdings. Consider upping your 401(k) contributions, putting more money into your IRA, or even adding to funds you already hold. Conversely, a run-up in the market may be the perfect opportunity to take some profit and build on your cash position or fixed-income allocation.  Your adviser can hold your hand and walk you through these market changes and be a sounding board for your concerns. ‪A good financial planner will also remind you of your goals and timeline and why the day-to-day changes of the market shouldn’t affect your long-term planning.

As an independent Certified Financial Planner™, I can help you decide on a plan, set a timeline and put that plan into action. I can also be there to talk you through market gyrations and remind you of your goals and timeline. Contact me and let’s start planning a calmer future for you today. #talktometuesday #education #Hireaplanner #marketmadness #upsanddowns #gyrations #correction #pullback #CFPPro