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Three Steps to Take in a Volatile Market

We’re living in peculiar times. The stock market has taken a sharp decline from COVID-19’s global impact. Checking the market every day feels like playing roulette. Many investors — especially retirees — are concerned about what comes next.

Bear markets are inevitable in the economy. For long-term investors, sometimes the best advice is to ride out the down markets instead of selling. But some investors require more action, and that’s especially true for those planning to retire soon.

What should you do as an investor? Here are three first steps to take.

Step 1: Don’t Panic

The most important thing you can do right now is keep your head on your shoulders. It may feel like the whole world is crumbling around you — and your future retirement plans along with it. But joining in the public panic will only make things worse.

When people panic, their emotions trump their logical reasoning. As a result, they make emotional decisions that probably won’t make sense in the long run. Many investors will see the market declining and decide to sell out. But according to, “Selling stocks when markets drop can make temporary losses permanent. Staying the course, while difficult emotionally, may be healthier for your portfolio.”

Panic does nothing to help your financial and emotional well-being. It won’t change anything you can control. We recommend not concerning yourself with the things you can’t control, and instead taking action on the things you can.

Step 2: Review Your Investments

Once you’ve put panic aside, it’s time to review your investments. You should only do this when you’re feeling calm, especially if you already know they will likely be down due to the market. After reviewing, it may be necessary to go back to Step 1, and that’s OK! But do not move on to Step 3 until you know panic will not cloud your decisions.

Step 2 is important, though, because many investors and retirees refuse to review their portfolios in a down market. They mistakenly think their problems will go away if they ignore them. This is their way of avoiding panic, but it’s not a good one because problems can always intensify if they’re ignored.

It’s important to review your investments and know exactly where you stand in a crisis. A financial professional can assist you with this if you want help.

Step 3: Adapt

When nearing retirement, your investments should be adaptable in a down market. Adaption can look like many things, but most commonly it means 1) diversifying your investments and 2) incorporating defensive assets into your portfolio.

Both diversification and defensive assets (like cash, cash equivalents, bonds, and treasuries) can be powerful allies in a market correction. That’s typically an area of focus for investors planning to retire in 1-4 years.

A financial professional can help you adapt your portfolio to match your risk tolerance while reviewing your diversification strategy and how defensive assets may fit into the mix. We suggest talking to a financial professional you know you can trust. Wise counsel is another deterrent against panic in a time like this!