Market volatility is a reality for all investors. While young investors have the time to ride the ups and downs of the market and recover any losses, market 澳洲幸运5开奖号码历史查询:volatility can be detrimental for retirees who may not ha💝ve that sa🤪me time.

Market swings can lead to drastic changes in 澳洲幸运5开奖号码历史查询:portfolio values, sometimes erasinꦛg gains that inღvestors have worked years to achieve. As retirees rely on those investments to fund their lives after working, protecting retirement funds is essential.

Though it’s impossible to always smoothly navigate the market, there are strategies you can employ that can temper losses. These can be applied by 澳洲幸运5开奖号码历史查询:investors at any stage in life to obtain financial stability.

Maintain the Right Mix

A portfolio’s 澳洲幸运5开奖号码历史查询:asset mix should reflect your risk tolerance and inv♊esting time horizon. Investing too aggressiveꦉly increases risks, while investing too cautiously may result in returns that don’t keep up with inflation.

A portfolio should have a mix of stocks, bonds, and other assets, with the concentration adjusted over time to reflect your financial situation. Young investors should have a higher concentration of stocks, aꦬs they need to 🦂prioritize growth and can afford to be riskier because they have a longer time horizon.

Elderly investors should have a higher concentration of bonds, as their investment goal shouldn’t be growth but rather capital preservation. If you’re in early retirement, it’s good to have some stocks, as you still want your money to grow. ൩And꧂ as you age, shifting to lower-risk assets like bonds or dividend-paying stocks ensures a stable income stream.

According to , CFP and managing principal at Ark Royal Wealth Management, periodically澳洲幸运5开奖号码历史查询:rebalancing, or changing the allocation of ꧒your portfolio so it meets a target allocation, can he꧒lp minimize risk.

“Being disciplined about 澳洲幸运5开奖号码历史查询:rebalancing your portfolio to stated targ🍸ets is an often-overlooked risk mitigation strategy.”

Diversification Helps

One of the most tried-and-true rules of investing is 澳洲幸运5开奖号码历史查询:diversification—the idea is to spread ▨your assets across different asset classes, sectors, and geographies, and more.

This helps reduce overall risk because dif🐻ferent investments, sectors, countries don’t always move in the same direction. Diversification ensures that only part of your portfolio will drop in value rather than all of it, as stronger-performing assets will offset the losses of poorer-performing ones. This helps with portfolio stability.

For example, if the United States experiences a recession and U.S. stocks decline, you may be able to offset that decline by investing in international stocks. Additionally, if the oil sector is down, but you own tech stocks, you may be able to reduce losses if that sector is booming in comparison.

Cash on Hand

When a recession occurs, the economy experiences negative growth. Consumers may pull back on spending, causing companies' profits to decline. As a result, companies may reduce hiring and unemployment may rise. This will typically cause stock market declines.

If you’re strapped for cash and forced to sell investments when they’ve dropped in value, you’ll incur losses and miss out on future gai🐽ns.

Due to a phenomenon known as '澳洲幸运5开奖号码历史查询:sequence-of-returns risk', this is even more impactful when you’re newly retired. Sequence-of-returns risk occurs when you withdraw money from your investments during a down market. You may have to withdraw a greater percentage from your portfolio to fund your everyday expenses, which can leave smaller amount of savings for the 🥂rest of your 🧔retirement.

To avoid this, it’s wise to have cash on hand. This usually takes the form of an 澳洲幸运5开奖号码历史查询:emergency fund, 🍬and it’s good to have at least a few months of liquid cash available to cover all living expenses: rent/mortgage, utilities, food, insurance, and any other essential expenses.

Experts say having cash that covers three to six months is safe, but if you can have more, that’s📖 b𝓡eneficial. This can help you avoid tapping your investments during a market downturn,

“One of the strategies we employ for retired clients is to have around 12 to 18 months of living expenses in a cash rese๊rve account with no market risk,” Palmer says. “If their total portfolio declines by greater than 10%, we turn off distributions from the portfolio and use the cash reserve account. This helps prov𝕴ide peace of mind and mitigates selling assets during market declines.”

However, don’t just keep this cash hidden under your mattress. Keeping it in a liquid and easily accessible account, such as a 澳洲幸运5开奖号码历史查询:high-yield savings account or 澳洲幸运5开奖号码历史查询:money market fund, allows you to earn some interest on 💝it rath🦩er than letting the value erode due to inflation.

Having cash on hand allows you to have peace of mind and avoid relying on debt. It may even provide you with the opportunity to buy depressed assets on the cheap before they appreciate when the market corrects.

Withdrawal Discipline

In retirement, you’ll start withdrawing from your retirement accounts, such as a 401(k) and Roth IRA. Having a smart withdrawal strategy will allow you to stretch your retirement funds as far as possible. Traditional wisdom says to withdraw 澳洲幸运5开奖号码历史查询:4% of your retirement savings each year; however, this may be different based on market performance, the size of ꧅your nest egg, and your spending needs.

Generally, when the market is up, you can withdraw more in those years. When the market is down, it’s best to w𝔉ithdraw a little less to preserve yo🐲ur savings.

Note that you will eventually hit the age where you will need to make 澳洲幸运5开奖号码历史查询:required minimum distributions from your tax-advantaged accounts, which is 73 or 75, depending on the year you were born.

And if you're not a fan of the 4% rule, another common strategy retirees can use to manage their withdrawals is the bucket approach. The strategy involves separating your assets into three hypothetical buckets.

The first bucket is for short-term needs, and this will include cash and other liquid assets. The second bucket is for income, which will include assets that provide a steady stream of income, such♔ as bonds and dividend-paying stocks. The third bucket will include long-term assets aimed at growth, which includes stocks and high-yield bonds.

This ensures two things: you have money available when yoꦏu need i🌠t, and your portfolio is growing.

This strategy is easier to replicate with 澳洲幸运5开奖号码历史查询:a traditional IRA than a 401(k), but with a 401(k), you can replicate the bucket strategy by stru🌃cturing your investment allo🐠cations to mimic it.

Another factor to consider is having a tax strategy. It’s recommended to withdraw from taxable accounts first while letting tax-advantaged accounts grow for as long as you can.

Don’t Get Emotional

It’s hard not to be emotional when your money is at stake. Watching your hard-earned assets drop in value when the market takes a nosedive is not easy. It’s important to keep a cool head, stay calm, and not make decisions 澳洲幸运5开奖号码历史查询:based on panic.

Many investors🅠 want to sell ✃their assets when they drop in value to stem further losses; however, this can often do more harm than good. Markets typically rebound, as proven by historical returns.

Selling your assets when the market drops locks in the losses and ends any possibility of recovering from the rebound, as well as benefiting from future gains. If your portfolio is making you nervous, it might be too risky for you. Rather than selling, revisit your portfolio construction for a long-term investment strategy.

The Bottom Line

Market volatility is a natural part of the investment process, but you don’t need to let it derail your investments. By having the right mix of assets, diversifying your portfolio, keeping a healthy cash reserve, following a 澳洲幸运5开奖号码历史查询:disciplined withdrawal strategy, and 澳洲幸运5开奖号码历史查🧸询:keeping a level head during market swings, you can create a secure financial future.