The stock market is suffering, and I know you’re scared. It’s terrifying to think that half of your money disappeared overnight.
But here’s what you need to remember: It didn’t.
Until you actually sell the investments in your retirement accounts, you have not sustained losses. It’s the act of selling that locks in your losses and keeps your portfolio from recovering.
When you make dramatic changes to your retirement portfolio based on fear – especially if that’s fueled by social media hype – you’re more likely to end up losing out in the long run. You’ll be stuck selling low, which is the exact opposite of your financial goals.
Your best bet: Stick with your financial plan. If you’re invested in good funds and solid companies, prices will rebound. Maybe not by 100%, maybe not quickly. But they will regain some of the market value they lost if you give them enough time.
Don’t sell anything based on what the market is doing today – take a breath, take a moment, and remember why you chose those investments in the first place. Retirement saving is a long-term gig, and these choices were meant to grow over decades of time.
If your investments made sense two months ago, they still make sense now. Funds and companies you chose to hold before the market took a dive probably still make sense in your retirement portfolio right now.
And if you really still want to sell investments after this intense panic has calmed down, take a look at your total retirement holdings and how they work with each other. Reevaluate your whole portfolio and your risk tolerance (which may change dramatically), and revisit your financial goals.
If it makes sense, revise your investment strategy and redesign your ideal portfolio. Then slowly, calmly, and carefully decide which investments to hold, sell, and buy. Because buying up great investments at fire sale prices may be the best possible move for your long-term personal wealth.
The exception: If you’re nearing retirement (less than 3 years to go) or have already retired, talk with a professional financial advisor. You may need to make some tough choices and sell some investments to prevent further losses at a time when you’ll need the money. But the key here is to sell strategically – and unemotionally – which is why consulting with a pro is a stronger financial move.