How to Navigate the Volatile Market, Ep #87

Does the volatile stock market make you uneasy? It’s easy to lose sight of the purpose of your investments when you’re reading the latest headlines or watching the news—especially with what’s happening with Russia and Ukraine. The market seems to be plunging in response. I understand why this makes you uneasy. That’s why in this episode of Retirement Made Easy I help you decide what to do with your retirement portfolio.

You will want to hear this episode if you are interested in…

• [0:56] The fundamentals of golf
• [4:24] How to get a FREE retirement assessment
• [5:25] What’s causing the volatility in the market?
• [9:34] It’s time to reevaluate your risk profile
• [11:58] Sometimes patience is the answer
• [13:39] Should you change your investment strategy?
• [15:53] A working portfolio versus retired portfolio
• [16:56] Panic is NEVER the answer

What’s causing the volatility in the market?

2022 is starting off very volatile. We’re seeing headlines like, “The Market Plunges 800 Points” or “The Market Soars 300 Points.” We’re seeing high inflation. We’re seeing “Now hiring” signs everywhere we look. Millions of jobs are going unfilled. During COVID, 3 million women across the US decided to exit the workforce to be stay-at-home moms because finding consistent childcare was difficult if not impossible.

The supply chain is a mess. People are ordering furniture that they won’t see for nine months to a year. Trucking and shipping companies are offering large sign-on bonuses and still can’t get enough people to work. Gas prices are soaring. Even worse, the crisis between Ukraine and Russia is also creating volatility. The Fed is going to raise interest rates four times in 2022 (after an expectation of 2–3 times) to decrease inflation. These are the many factors leading to the volatility in the market.

It’s time to reevaluate your risk profile

Since we don’t know when the market volatility will end, this is a good time to look at your investment portfolio. If the volatility is keeping you up at night, maybe you need to reevaluate how your portfolio is invested. The market had been on a steep incline. Perhaps your portfolio is risky-heavy because of this. Maybe you haven’t rebalanced your portfolio and now is the right time to scale back. Look at the risk score of your portfolio and see if it still matches your tolerance.

Let’s say you’re a moderate investor with a risk score of 50. But your portfolio risk score is currently at an 80–85. That doesn’t match. Your portfolio is out of balance. It’s like checking the air pressure in your tires. You often don’t pay attention to the tire pressure until something is wrong. It’s time to make sure your portfolio is in line with your risk score.

Should you change your investment strategy?

With everything happening across the globe, how do you approach the decision-making process? If your portfolio is too risky and out of balance, you can scale it back. But have your goals changed? If they have, then it makes sense to revisit your retirement strategy. The goals you have for retirement absolutely dictate how your portfolio should be allocated. If at ANY time your long-term goals change, you need to make modifications to your strategy.

I worked with a nice couple who had been retired for a couple of years. They had two granddaughters. After a serious medical issue incapacitated their daughter, they stepped in and adopted their granddaughters. It wasn’t on their radar when they retired. They had to make drastic changes to their retirement goals. So we made amendments to their portfolio because their needs had changed.

Sometimes patience is the answer

Your investments will always go up and down in value. Some portfolios will go up and down more often than others, depending on their risk profile. It’s generally not a good idea to let short-term interruptions in the market impact your long-term goals. If you’re a long-time listener, you know I often state that no one can consistently time the market. Ever. If you agree with this premise, you have to let time work for you. You do this by designing a retirement strategy that gets you through retirement.

What do you do if your portfolio is balanced? What if your goals haven’t changed? I share how you should respond to the market in this episode of the Retirement Made Easy podcast.

Resources & People Mentioned

• Episode #6: The Retirement Story Everyone Needs to Hear