Don’t Let Emotions Determine your Retirement!
With all the media hype and the market volatility it’s human nature to let your emotions make your investment decisions. Unfortunately, knee-jerk reactions to these pressures can cost you dearly. A “Quantitative Analysis of Investor Behavior” report by the Boston research firm Dalbar shows that, if an investor remained fully invested in the S&P (Standard & Poors) 500 Index between 1995 and 2014, they would have earned an annualized return of 9.85%. But if they missed only 10 of the best days in the market, the return would have been 5.1%. Missing only a few days during a 20-year period almost cut the average return in half!
So, what should you do?
- Stay disciplined – remember your retirement plan is a long-term investment.
- Keep your investment portfolio well diversified - spreading your investments across multiple asset classes can provide protection as it’s very rare for all markets to move in unison.
- Continue Dollar-cost averaging – salary deferrals are invested at current market prices each pay period. Some would say when the market takes a dip it’s a great time to increase those contributions, it’s like buying the investments while they are on sale.
- Review your objectives – are they still appropriate for your future needs?
- Consult with your investment/plan advisor – He/she can help you to stay the course to achieve your goals.
Sources: Forbes.com