Let’s play a game of “what if.” We’ve had a lot of stock market volatility over the last four or five weeks. What if the stock market continued its drop and went down another 2,000 points next week? Or, what if the market had a 50% correction (like it did in 2008), and dropped by more than 12,000 points?
Would you be panicked? Would you be saying to yourself you knew this was going to happen, and that you should’ve followed your gut?
We know that market timing doesn’t work. But we also know that we have to be prudent and make smart financial decisions, especially as we get closer to retirement. Please don’t misunderstand me. This isn’t crazy talk. I’m not trying to scare you.
The average stock market correction over the past 70 years lost 13.3%. The last major stock bear market resulted in almost a 55% loss during 2007-2009. Almost $16 trillion in market value evaporated. We have bear markets about every 8 years or so, but are now in the longest bull market run since 1900. It ended in March 2009, pushing almost 10 years.
That doesn’t mean that we’re going to see a bear market next month, or even next year. But it does mean if I’m looking out in the next two or three years, a bear market is highly probable.
You can take simple, proactive steps now to protect you and your retirement lifestyle as best as you can, no matter what happens next on Wall Street. On this show, we talk about five essential strategies that can help protect everything you’ve worked for.
- Strategy 1: Diversify (3:50)
- Strategy 2: Avoid emotional investing (16:23)
- Strategy 3: Forget about “timing the market” (19:30)
- Strategy 4: Use tax loss harvesting to your advantage (26:31)
- Strategy 5: Don’t go it alone (35:36)