During times of market volatility, it can be hard to take a long-term view. It’s important not to let emotions drive our behavior. But knowing we should leave our retirement savings alone during the market’s down days and actually doing it can be difficult—especially at a time when you feel helpless and want to do something.
Letting your investments ride out the storm does not mean that you should sit on your hands. There are smart actions you can consider taking now that are likely to improve your financial situation for many years to come:
- Add to your retirement savings
- If you can increase what you’re saving monthly to your retirement savings (even by a small amount) now is the time.
- When you look at the stock market, think of the “red” you see as a widespread price reduction at your favorite retail store. Things are on sale. If you can increase your savings incrementally now, it will benefit you over the long run.
- The same is true for excess cash on hand. Assuming you have an emergency fund already in place, if you have additional cash available, consider adding it to your nest egg investments now.
- If you’re planning a purchase that would require you to take a withdrawal from your investment portfolio, put it off if at all possible. Delaying the purchase until the market has recovered is in your long-term best interest.
- Interest rates are at historic lows. If you have a mortgage and plan to be in your home for the foreseeable future, a refinance may be worth considering. Such a move could increase your monthly cash flow allowing for increased retirement savings (see number 1 above) or additional principal payments, which will allow you to pay off your mortgage sooner than planned. But remember—use the freed-up cash flow for your future, not for your next Amazon purchase.
- If you’re near or in retirement and the market volatility continues, an adjustment to your plan may be the best long-term decision, even if it causes temporary pain. Meaning, reducing your spending for a period of time, picking up some part-time work (to reduce nest egg withdrawals) or delaying a purchase (see point 2) may be in your long-term best interest.
Last year, we revamped our service offering and began rolling out an adjusted fee schedule for clients who added ongoing financial planning services to their investment management agreement. This new structure allows us to have a personalized plan in place for each client that we can adjust proactively. Market volatility is an excellent example of such a time when proactivity and a course correction may be appropriate. With a plan in place, such adjustments are easier to navigate and thereby increase peace of mind in an uncertain situation. If you’d like to talk to us about this new offering, don’t hesitate to reach out.
The opinions expressed are those of PYA Waltman’s Investment Team. The opinions referenced are as of the date of publication and are subject to change due to changes in the market or economic conditions and may not necessarily come to pass. Forward looking statements cannot be guaranteed.
PYA Waltman (“PYA”) is an investment adviser registered with the U.S. Securities and Exchange Commission. Registration does not imply a certain level of skill or training. More information about PYA’s investment advisory services can be found in its Form ADV Part 2, which is available upon request. PYA-20-15