| Checking your 401(k) and other financial statements these days may actually be hazardous to your health.
To be fair, many of us have the right to be anxious as we watch the markets wildly gyrate. It's like being on a runaway roller coaster and you just can't get off the ride.
The key, financial experts keep telling us, is to maintain your composure in these chaotic times. That takes some inner strength and also smart financial planning.
So, instead of making any rash moves, experts say it would be wiser to keep emotions in check and never lose sight of your own personal financial goals, both short-term and long-term.
It's key to remember this: History shows us that the U.S. stock market has always recovered from declines in the past. If you put money in stocks, over 10 years you would have been down about 6% of the time. Meanwhile, over 20-year periods, the market has never been down.
Amid all these scary times, there are steps investors can take to protect their money, financial advisors say. The CNBC personal finance team interviewed a bunch of advisors who offered some tips to help guide investors.
"Wealth never disappears; it just shifts," certified financial planner Ivory Johnson said. "I'm telling my clients to be very defensive."
That includes reducing their stock exposure "considerably," he said.
Johnson is also upping clients' allocation to cash and gold, which has been traditionally viewed as a safe haven in market downturns.
Meanwhile, CFP Allan Roth suggests that investors looking to protect their money turn to short-term Treasury bonds and I bonds.
What investors don't want to do is pause their investment schedule, said CFP Carolyn McClanahan. "The goal is always to buy low and sell high," she said. "Well, now is low."
Advisors also tell investors to make sure their portfolio is balanced and that the equity allocation is in line with their personal financial goals. Ideally, a diversified investment strategy will expose an investor to different areas of the market to help manage the overall portfolio risk.
Finally, avoid the impulse to try to time the market.
Timing the market is a strategy that involves buying and selling stocks based on expected price changes. Conventional wisdom says that timing the market doesn't work most of the time. It's very challenging for investors to make money by correctly timing buy and sell orders just before prices go up and down.
"Trying to time the market is likely going to result in you missing out on some really, really good days," said Jordan Jackson, global market strategist at J.P. Morgan.
For more cool stuff like this, be sure to visit CNBC's Financial Advisor Hub and CNBC + Acorns Invest in You: Ready. Set. Grow. |
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