7 Retirement Tips to Remember During Market Volatility

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Unless you’re a finance professional, deciding when and how to invest in the stock market can be stressful under the best of circumstances. After the market downturn caused by the COVID-19 pandemic, those decisions have become more difficult than ever. Still, there are some principles that can guide your long-term investment planning, whether you already have a significant investment in the markets, have just started investing, or need help deciding where to begin.

Read on for what experts advise when it comes to the market and your money, in light of current global events.

1. The Market Is Meant to Ebb and Flow

History shows that a market that dips will eventually find its way back up. Bear markets—which occur when stock prices fall drastically for a sustained period of time—have occurred a number of times in the past (as recently as the crash that extended from October 2007 to March 2009). And although they can take a number of months to recover fully, it’s comforting to recognize that they always have recovered.

2. Don't Pull Money Out of Current Investments

If you’ve checked your investment accounts lately, it can be tempting to pull all of your money out and put it somewhere “safe.” Experts warn against that, though. By keeping your money where it is, you can rest assured that when the market does start to climb back up, you’ll be able to take full advantage of that growth from the very start.

3. Keep Up Regular Contributions

For a number of reasons, it’s important to stay the course with your retirement planning, even during the current economic climate. To start, with market prices at the lowest they’ve been in years, now is actually the exact time people should be putting money into their retirement accounts. That doesn’t mean you should put more money in than you normally would—especially since a fully-funded emergency savings account is more important than ever, now—but you should at least keep contributing at a regular pace.

4. Resist the Urge to Check on Investments Daily

No one can predict when a falling market will start to rise again, and checking your accounts every day during a turbulent economic cycle will only serve to cause you more stress and confusion. It’s important to stay on top of news and fluctuations, but you can do that without checking your account balances multiple times a day.

If you work with a financial advisor, now is the perfect time to speak with them to discuss what safeguards have been put in place to help your accounts weather these types of storms. They can also advise on any shifts you should be making to help curb the impact of the declines.

5. Diversify Your Portfolio

Speaking of changes to your accounts, it’s important to have a diversified portfolio. That’s true in general, but even more so during a turbulent market. When your funds are invested in one company, only a few companies, or even in just one type of investment, you’re more vulnerable to dramatic twists and turns in the market. A diversified portfolio with a number of different investment types is the best way to protect your money when things get rocky.

6. Evaluate Your Risk Tolerance

Besides having a diversified portfolio, now’s a good time to evaluate whether your investments are meeting your overall needs. For one, think carefully about your risk tolerance. Younger investors often have higher risk tolerance since they have more time to make up for any losses before retirement. However, if retirement is right around the corner for you, it’s important to make sure that your portfolio allocations match your specific goals.

7. Maintain Funds in Liquid Assets, Too

Investing as much as you can and as early as you can is a smart plan, but it’s also important to make sure that you’re prepared with cash on hand. Keeping a stash of three to six months’ worth of funds in a high-yield emergency savings account is a good start.

If you’ve done that, you can also find some other ways to make the most of interest, but without as much of the risk that’s associated with investing in the market. Bank CDs, for example, typically offer higher interest rates than other savings products, and they tend to be much more flexible than traditional investment accounts.

These are turbulent times, to be sure, but following some expert advice is the best way to ensure you protect your assets—and continue to meet your long-term retirement goals. If you need a little more help, a Fifth Third Bank representative is available to answer your questions.

The views expressed by the author are not necessarily those of Fifth Third Bank, National Association, and are solely the opinions of the author. This article is for informational purposes only. It does not constitute the rendering of legal, accounting, or other professional services by Fifth Third Bank, National Association, or any of their subsidiaries or affiliates, and are provided without any warranty whatsoever. Deposit and credit products provided by Fifth Third Bank, National Association, Member FDIC. Fifth Third does not provide tax, accounting or legal advice. Please contact your tax advisor, accountant or attorney for advice pertinent to your personal situation.