A market dip may be fine for younger investors, but here’s what to keep in mind if you’re within five years of retirement. Crowell counsels older investors to have in place a plan that details where income will come from, once they’ve received that final paycheck.
“Map out at least 20 to 30 years,” he said. A higher percentage of people who retire in their 60s will live into their 80s and 90s.
Assets should become more conservative as you move closer to retirement. “Yet, it still should never be so conservative that one risks hamstringing their potential returns in retirement,” Crowell said.
These days, the advice is not to exit out of equities entirely. As people need to plan for two or three decades of retirement, their money should keep pace with the cost of living over that time horizon. Even at retirement age, your portfolio should anticipate market volatility.
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We’re all familiar with the mountain chart of the S&P 500 and how it keeps climbing up to the right. “With that mental picture, I would tell people to pause and take a deep breath any time before getting emotional about anything in the short term,” Crowell said.
Midterm elections take place every four years, between presidential elections, and we’ve seen all the permutations. At the end of the day, whether we get a split Congress or a uniform one, it still comes down to the same thing.
“The stock market is nothing more than the compilation of the share prices of a lot of individual companies,” Crowell said. “It still goes back to a company’s boardroom.”
Don’t underestimate the resilience of the stock market. “We have such a long history of seeing how the stock market performs or recovers after elections that have surprise outcomes or predicted outcomes,” Crowell said.
When share prices rise, it’s not because there’s a Republican or a Democrat in office. “Profitability may change, but companies need to navigate the new playing field after an election, and history shows that most do.”
No matter how Americans vote, companies will still hold meetings to determine how they’ll sell more cars or more toothpaste.