MONEY HACKS: What Should I be Doing with My Investments and Savings?

A very common question we are receiving in early 2022 (for the first time in a long time) … So, we wanted to take a few minutes and answer— what should I be doing (when it comes to my 401(k), my IRA, or my other investments and savings) during a market sell-off?

Over the last two-plus months, we’ve seen a sustained market correction. We know it’s unsettling and creates fear when your accounts suffer a large drop for an extended amount of time, but the key to success is to take a breath, focus on your financial goals, and make sure you’re investing way in a way that’s right for you. In this Money Hacks episode, Alex walks through several immediate actions you can take to help ease your market correction worries. Let us know if you have any questions or if you’d like to discuss your risk tolerance.

Resources:

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?

Video Transcript:

Hey, this is Alex Assaley it’s episode number 89 of Money Hacks, our team has held hundreds of one-on-one financial coaching sessions with investors, savers, and employees at companies and organizations where we serve as their 401(k0 or 403(b) fiduciary advisor and as many know, over the course of the last two-plus months, we’ve seen a pretty sustained market sell-off/ market correction across the US in global stocks and as we’re doing these one-on-one meetings, the big question that folks have is- What should I be doing when it comes to my 401(k) or my IRA or my other investments and savings?

I won’t get into or pontificate around the global landscape, the geopolitical issues that we’re facing, or some of the economic challenges we have. Instead, I want to talk more about ideas and takeaways, and considerations you may have as an investor and saver. So, first of all, I want to start with long-term retirement savings, like our 401(k)s and 403(b)s. Now might be a good time to take a look at those accounts, but if you’re of the faint of heart, when it comes to your money, you might be better off not looking at them. But we do want to make sure that you are invested the right way that aligns with your time horizon, your age, and your overall risk profile. The reason I say, you know, you don’t need to look at it every day, is the continual ups and downs and maybe more of your account. Could drive you to make a short-term emotional decision that is not in your best interest, that does not align with your long-term financial goals. With that being said, we want to ensure that you’re invested across a broad mix of investment vehicles and again, that aligns with your long-term financial strategy.

For most of us who are in do it for me, target-date funds or some type of model portfolios or allocation, it means that you don’t need to do anything when it comes to your 401(k) or 403(b) in fact, by contributing every pay period, a percentage of your pay. And if for those who are fortunate to get an employer match or contribution, you’re actually buying more shares into that strategy at lower prices than we were just two months ago or three months ago. If you have a longer time horizon like 5, 10, 20, 25 years, it’s going to allow that money to grow and appreciate to build up your assets for retirement.

When it comes to other investments that might not have as long of a time horizon if you’re saving an investment account, a non-retirement account for a financial milestone, or a goal that’s three or five years away. This is also a time to reassess what the appropriate mix of that portfolio should be now in a video like this, I can’t provide guidance on what you should absolutely do if you should reallocate or make changes and that’s hard to do when we’ve seen a 10 or 15% correction in certain asset classes, but I think it will help you to understand the risk a little bit better, and as you get closer to the time that you’re going to use that money you’ve set aside, you know, some assets in an investment account that you want to use in the next two or three years to purchase a property for example. It may be a good time to start planning on how to reduce your risk in those accounts, over the course of the next couple of years, before you get to that date when we’re going to need to use the money. Then finally the area where I think a lot of families and individuals may be losing sight of is short-term emergency savings.

Those assets, that money should always be held in a stable account. We recommend high yield savings accounts or money market funds, where you’re probably not going to earn much in this low-interest-rate environment, but it’s going to guarantee that that money is there in the event of an unexpected expense or emergency. So, in summary, we’re long overdue for this market correction. We’ve had a number of great years and now I know it’s unsettling, painful creates fear when you see a sustained sell-off in the markets, and we could see this, you know, for a little bit longer, a few months, or even longer than that. But you know, be disciplined, make sure you’re investing way in a way that’s right for you, and if you have questions or there’s anything we can do to help, please feel free to reach out, check us at MoneyNav.com or on social.