Is the stock market making you jittery about your retirement security? No wonder. After behaving placidly throughout 2017, stocks started jumping around this year like an enchanted pogo stick. By early March, the broad-market S&P 500 index had closed up or down 1 percent or more on 17 separate days—double the number for all of last year. And on Feb. 5, it dropped more than 4 percent—a one-day downward swing not seen since the summer of 2011.
The standard advice at times like this is to do nothing and stay the course. And while it’s good advice, sometimes you need more than that abbreviated answer. So here are tips from top personal finance gurus on what to do in an unsettled market.
Stick to paper statements.
Many of the worst decisions investors make in an unstable market result from keeping too close an eye on their portfolio. Some people—particularly retirees with lots of time on their hands—can end up checking their investments a dozen or more times a day. This nonstop online access typically causes panic that dovetails with short-term thinking, says Eric Tyson, coauthor of Personal Finance After 50 for Dummies. He advises older investors to greatly reduce, if not eliminate, their online access and to simply review the quarterly statements mailed directly to them. “In a declining market, people go online and think the world is ending, then sell,” he says. “The reverse is what you should be doing.”
Inspect your holdings.
While sitting tight and patiently waiting for the market to recover isn’t a bad idea, Tyson says you shouldn’t completely ignore what you own. Instead, he says, look at your entire portfolio and ask yourself this critical question: If all my holdings were suddenly 100 percent cash, would I buy the same stocks and bonds that I have today? In other words, are my investments the best they can be? If the answer is no, Tyson says, it’s probably time to make changes and swap some out.
Get a second opinion.
Let’s say your portfolio stagnated when the market was up, or perhaps slipped more than others during the recent downturn. If you’re using a financial adviser, this is a good time to show your portfolio to three other advisers, Tyson says. Each, of course, will find something to quibble with. But if all three make similar suggestions, you may want to ask your adviser about what they have proposed—and listen hard for answers.
Save more, risk less.
If you’re in your 50s but still have little savings, avoid the temptation of jumping into stocks now in the hopes of riding a comeback to retirement security, says Ben Carlson, director of institutional asset management at Ritholtz Wealth Management. Immediately raising your savings rate—say, from 10 percent of income to 20 percent—is a far better strategy than suddenly increasing the percentage of your investments devoted to stocks, he says. “If the kids are out of the house, this is your chance to put some money aside.”
Talk to your spouse.
Any time a couple are dependent on the same financial resources, it’s important for both of them to fully understand their investments. But shared knowledge is even more important in times of uncertainty. If you’re the spouse who takes the lead on investments—and typically one spouse does—then talking about your portfolio can relieve the lonely burden of keeping all your worries to yourself. You’ll also be doing yourselves a favor by getting a second opinion about your situation. Says Tyson, “Your spouse might think of things that you didn’t.”
Look elsewhere for money.
If you’ve been pinning all your hopes for retirement security on the stock market’s performance, generating other sources of income will ease the pressure you place on your investments—and the anxiety they create for you. One option is returning to work. While that may not have been part of your original retirement dream, studies indicate that part-time jobs probably improve retirees’ health, and definitely improve their social network. Consider starting your own consulting business, says Mitch Levin, M.D., author of Smart Choices for Serious Money: How to Protect, Preserve, and Thrive in Uncertain Economic Times. Most retirees have an expertise, he says: “There are people who will pay to learn what you know.”