Ride Out the Ups and Downs

Ride Out the Ups and Downs

Don't let market volatility derail your retirement savings plan.

Market volatility describes the natural ups and downs of the financial markets. Even though market swings are normal, big spikes and steep drops can be stressful – especially when you’re trying to save for retirement.

How do you stomach the bumps and stay on track with your savings?

Don't panic and follow 3 key strategies.

1. Stick to Your Investment Plan

Your investment plan is built on these important building blocks:

  • A retirement date. Figure out how long you’ll have to save.
  • Your major life goals. Plan for small and big events in the future.
  • Your tolerance for risk. Find your comfort zone.

Your plan is like a safety belt when the market starts seesawing. Stay on track by sticking to it during market swings.

2. Diversify

Reduce your financial risk by putting your money into different types of investments. This can smooth out the ups and downs of the market, because each type of investment reacts in its own way. When you diversify, your money isn’t all going in one direction. Bonds, for example, may rise in value when stocks are performing poorly.

A diverse portfolio may include stocks, bonds and cash equivalents, as well as higher-risk real estate investment trusts or commodities.

3. Think Long Term

Here’s something to remember when the market starts fluctuating — the stock market has experienced overall growth for at least the past 30 years. And average returns have been about 10% a year.1 Long-term investing gives you more time for potential growth and for absorbing the ups and downs of the markets.

Stocks, Bonds, Cash Equivalents and Inflation 1989–2019

The index performance shown is for illustrative purposes only and is not indicative of the performance of any specific investment. This illustration assumes $1,000 invested in each category from September 30, 1989 – September 30, 2019. The illustration is based on the S&P 500 Index, the BarCap U.S. Aggregate Bond Index, the 3-Month T-Bill Index and the Consumer Price Index. Past performance is no guarantee of future results. Investments are subject to market risk and fluctuate in value. Source: Morningstar Direct.

Buckle Up and Be Safe

  • Avoid selling stock investments when the market goes down.
  • Avoid trying to time the market.
  • Avoid the urge to reduce or stop contributions to your retirement plan.
  • Avoid keeping all or most of your assets in fixed-income investments, such as cash equivalents and bonds, unless you are near or at retirement age.

Rebalance and Reset

Make sure to rebalance your investment plan on a regular basis — quarterly, semiannually or once a year. Volatile markets can change the proportion of your funds in different asset classes. Rebalancing resets your portfolio to your desired investment mix.

To enroll in your plan or rebalance your investments, log in to your account.

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1 Past performance is no guarantee of future results. The investment return and principal value of an investment will fluctuate and an investor’s interest, when redeemed, may be worth more or less than the original investment. Source: “Annual Returns on Stock, Bonds and T.Bills: 1928–Current,” NYU Stern School of Business, 2019.

Investing Strategies