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5 tips for keeping your perspective on the market

Investing in the stock market can be one way to help prepare for retirement, but the market can have its ups and downs.

While the market certainly fluctuates, it doesn’t have to be a nerve-wracking experience.

Basics of the market

Created in 1792 on Wall Street, the first major U.S. stock exchange was the New York Stock & Exchange Board (now known as the New York Stock Exchange).1 The stock market is a group of exchanges where securities like stocks and bonds are bought and sold. It helps companies raise money to fund operations by selling shares of stock, and helps to create and maintain wealth for individual investors.2

For some, following the stock market can seem daunting — but it doesn’t need to be.

Here are five tips on how to gain perspective, keep your cool, and make investing decisions based on good information — not out of fear or worry.

Invest for the long-term

Saving for retirement is a journey, not a sprint. Don’t change your investments simply because of day-to-day volatility. Set a strategy and stick with it.

A volatile market can push the most experienced investors into making emotional decisions. However, having a diversified portfolio can help instill confidence in your long-term plan. So don’t abandon it during big market swings. Gain perspective by analyzing market movement over long periods of time. Markets go through cycles. History tells us that bear markets don't last forever.3

A popular strategy to consider is dollar cost averaging.  The main goal with this strategy is to help take emotion out of investing and potentially lower the average price per share over time. It encourages you to invest the same (or roughly the same) amount each month or year regardless of the market’s fluctuations, potentially helping you avoid the temptation to time the market.4

Diversify your investment portfolio

Make selections based on an asset allocation appropriate for your own risk tolerance, goals, objectives, and time horizon.

Keep in mind that the goal is to grow your money – even if it’s slower than you’d like. Stay within your budget and don’t get greedy and gamble by taking big risks.

Do not try to time the market

Investors who jump in and out of the market often miss the greatest growth opportunities when the market rebounds.3

The stock market is hard to predict — so don’t even try. Financial professionals often warn investors of trying to time the market.

Rebalance your assets on a regular basis

Over time your percentages in stock, fixed income, and money market investments will drift – based on which investment the market is currently favoring.

Because the world is so connected, an event happening in one area of the world can greatly impact financial markets in another part of the world.

So it’s important that you or a financial professional keep tabs on your portfolio and make needed adjustments in order to keep your portfolio in line with your stated objectives.

Be patient. Your retirement is a long-term investment

Getting overly emotional or upset in times of market volatility can make you stress and thus hurt your health and your portfolio. Don’t invest in a way that is outside of your risk tolerance if you’re going to make unwise decisions because of it. 

Don’t worry about short-term fluctuations in your account balance. Stay the course. Calculate your retirement income goal and contribute as much as possible so you can make every moment count.

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Have additional questions?

A financial professional can help answer any additional questions about your personal situation and readiness to retire.

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1. “Wall Street and the Stock Exchanges: Historical Resources,” Library of Congress Research Guides, January 22, 2022.

2. Tretina, Kat. “What Is The Stock Market? How Does It Work?” Forbes.com, January 19, 2022.

3. Summer, Jeff, “How To Survive When Stocks Behave Badly,” NYTimes.com, January 25, 2022.

4. "Three Things to Know About Dollar-Cost Averaging," FINRA.org, 2022.

Investments will fluctuate and when redeemed may be worth more or less than when originally invested. Neither asset allocation nor diversification guarantee against loss. They are methods used to manage risk.

DOFU 3-2022
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