Wall Street’s recent volatility may be unsettling for investors, but financial experts say it’s essential to consider the bigger picture when making investment decisions.
The S&P 500 has lost over 16% since its all-time high in February due to concerns about President Donald Trump’s tariffs. However, this market correction is not unique; similar declines have occurred throughout history, and they often serve as a necessary step towards better returns in the long term.
Stomaching market downturns requires patience and a clear understanding of your financial goals. Historically, the S&P 500 has recovered from every downturn, with some recoveries taking longer than others. Before making any decisions, consider your emergency fund needs, investment horizon, and overall risk tolerance.
Experts advise against putting money into stocks that you can’t afford to lose for several years. A diversified strategy that adapts to changing circumstances can help mitigate losses, but it’s crucial to avoid making emotional decisions based on short-term market fluctuations.
For younger investors with decades to go until retirement, this current volatility may be an opportunity to ride the waves and let their stock portfolios recover before compounding and eventually growing bigger. In contrast, older investors nearing retirement should prioritize preserving their capital and potentially adjusting their withdrawal strategy during sharp market downturns.
Ultimately, it’s impossible to predict exactly how long this market correction will last. What’s essential is having an open conversation with your financial adviser and portfolio manager to ensure you’re making informed decisions that align with your long-term goals.
Source: https://apnews.com/article/investing-tariffs-retirement-stocks-diversification-portfolio-ee662f0f5a84aa483ca741351e23d876