MONEY HACKS: How to Invest During Volatile Times

The last six months have been very challenging in the financial markets, adding stress, fear, and frustration to retirement savers and investors. A year or so ago, a lot of investors were in “panic buying” mode – feeling like they were missing out on asset growth and buying aggressive stocks (remember those “meme” names), upgrading their homes, etc. Some, if not all of that exuberance, has unwound as the markets declined during the last several weeks and months.

With that said – remember your long-term investment and retirement strategy, make sure your current asset mix aligns with that strategy, and if so, don’t get caught up in short-term, emotional decision-making that can cause you to miss out on longer-term returns (over 3-, 5-, and 10-year periods) by trying to time the market. Learn more about investing during volatile periods in the video below.

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Any money questions you’d like answered? Our Money Hacks series is created from conversations we have with employees, investors, savers, and all people planning for their financial futures. What topics are on your mind for our next episode? Email us here!

Video Transcript:

Hey, this is Alex, and its episode number 92 of Money Hacks and certainly been a very challenging period for investors, and for the financial markets, every couple of weeks, our team gets together, and we populate a list of the top questions, concerns, and discussion points we’re having with investors and savers and 401(k) and 403(b) plans, and the one-on-one coaching sessions that we do. And one of the topics we were going to discuss was around panic buying. This fear of missing out on a trade. That’s been happening in the markets over the course of the last few years. Investors rush to go out and buy a new house or other things that ultimately can create some overpriced asset classes or even bubbles in certain asset classes.

I don’t want to say that that’s what’s happened, but over the course of the last probably five and a half or six months now, we’ve been in a major correction. We’re now in bear market territory, again, and so you know, there’s increasing degrees of concern and fear from investors when it comes to their investments, their savings, the economy, and a lot of things, these things are beyond our control. And so, the message that we have in our one-on-one coaching sessions, or when we’re talking to retirement committees is really centering around the aspects of investing or saving or the overall financial life that we can truly control, centering around the strategic initiatives or the long-term goals that we have. And so similar theme to some Money Hacks we did back in the first quarter because we’ve continued this tumultuous period that without question has been painful to watch, be painful to experience when you look at your investments or your 401k. And I know sometimes the headlines or, or even economists or experts that you may hear on certain outlets like CNBC or Bloomberg, or others may seem to revel in, in the markets going down. But trust me at our office, it’s a painful feeling too. Like you, we share, with you know the concerns of a market downturn, but we also know that these types of environments are normal.

They happen and it’s impossible to really time or predicts when they’re going to happen or how deep they’re going to be, and so if you’re a long-term investor, the strategy, and the way to weather a correction or a bear market is really to make sure you’re investing in a way that aligns with your age, your time horizon, and risk profile.

So, if you’re 35, 40, or 50 years old, and you still have 10, 15, 20, or 25 years until you’re going to retire and use the money in your 401(k) or 403(b) you may not need to take any action. It’s really, maybe the best thing you can do is, is staying allocated to that mix that you have if it aligns with those criteria, age, time horizon, and risk profile.

Now for other types of assets that you have, that you might be using in the next one to three years or shorter period, we want to make sure that you’re not taking too much risk with that money, as well. And so, you know, the message of this Money Hacks is really staying focused on the long term, not getting too emotional, and making decisions about what’s happening on a day-to-day basis because on a day like today the stock market is down significantly. I’m sure that headline news will be talking about the plunge or the selloff we’re seeing in the markets. And I don’t want to sugarcoat it. It is a difficult period. It is painful. And there are a lot of economic factors that take a much longer video to talk through all of that.

We’re happy to do it if you have questions or if you want to reach out to us. But our message remains the same that we’re going to get through this period. We don’t know how long it’s going to take. We don’t know. How much lower the market can go. It can always go lower, but it will also recover.

So, for the longer-term investors keep that in mind, staying resilient, but also staying thoughtful around investing the right way. So anyway, hope this is helpful it kind of centers you back to your investment strategy. If you do have questions or concerns or if there’s anything we can do to help please reach out to our team, our financial coaches, or reach us on social. Thanks. We’ll see you next time!