There are so many people out there who will tell you they know what the stock market is going to do. People on both sides have vastly different opinions. Some say that we are in a golden age and the market will only continue to go up, but others are saying to get out while you still can because the market is heading for the biggest correction to date.
Stock Market Trends
How do you know who to trust? What advice should you listen to? I wish there was a magic mirror, but there really is no way of knowing for sure what will happen in the future. I won’t presume to tell you that I know for sure what is going to happen either. What we can do is look at past performance. We can logically look at the history because everyone has heard that it repeats itself. In the last hundred years (since 1915), the market has crashed a total of 12 times. Those years are 1916, ’19, ’29, ’37, ’46, ’61, ’68, ’72, ’80, ’87, 2000, and ’08. That is on average every 8 years. It is now 2018, so it has been 10 years since the last crash. Doesn’t that mean we are already overdue? Many experts in the field believe so.
What are you going to do with this information? I am not telling you this so you can run and hide in fear. I am telling you this because, just like for every disaster, you need to have a financial plan before it happens. Preparation is key to your success. We have fire drills, tornado shelters, and protocols for just about every disaster out there. We know how to prepare for them. But how do you prepare for a financial disaster? Well, first you need to know how is it going to affect you? If you have 30+ years until you retire, you have plenty of time to make it up. However, if you only have two years until you retire, can you afford to lose what you have? What would happen to your retirement plan? Now, people will tell you, “that’s why I have a diversified plan, so I don’t lose much.” That’s great for them, but I don’t want to lose anything I’ve worked hard to save in my retirement planning.
Retirement Planning to Protect Against Volatility
If a significant amount of your retirement portfolio is in the market, regardless of whether or not you think you are diversified, you are tied directly to the fortunes of Wall Street. I don’t know about you, but I don’t want the majority of my portfolio to be tied to the success or failure of Wall Street. Especially right now in such a volatile market.
Many are saying that the current volatility in the market mirrors the crash of 1987 known as Black Monday, where the Dow plummeted over 22 percent. Art Cashin, Managing Director of USB Financial Services says, “It’s a good deal more volatile than almost anything you’ve seen. It is unfortunately reminiscent of some of the volatility we saw in ’87.”
It’s time to make sure you are prepared for whatever comes. Do an evaluation, reassess your retirement planning, and see how much risk your portfolio can handle before it negatively affects your future.
To review your financial portfolio and commit to proactive retirement planning, schedule a consultation with Elite Retirement Strategies.
Holly Peterson is the owner of Elite Retirement Strategies and former radio show host. She is a professionally licensed insurance producer specializing in retirement planning and safe money solutions. Holly serves all of Idaho, including Pocatello, Twin Falls, and Idaho Falls.