Does it seem like lately the markets are more like a rollercoaster ride than a principled way to grow your wealth? Obviously, markets will go up and down during an investor's life, but the challenge is to keep calm while experiencing the downs. From personal experience and in the work I've done with clients over the years, I've seen the benefit of staying in the market. The old adage is that when it comes to investing, you should buy low and sell high.
During times like this, you may be wondering what are some ways to mitigate the risks that are inherent in the market, especially if I don't have as much time to ride the rollercoaster as others do. Part of the role of an advisor like myself is to help people manage risk while trying to grow their assets. I would be remiss if I didn't point out that from January 2015 to December 2024, the average annual return of the S&P 500 was 12.21%1. Obviously, that doesn't give solace to those seeing the markets lately, but it indicates that markets over time have shown to be resilient.
But it still begs the question, what should you do if you don't have 10 years or more to wait? In these situations, I often discuss with people all of the above strategies when it comes to investing. It makes sense to have money in the market, but we should also be looking at ways to protect some of your money against market downturn. Everyone's situation is different, but a conversation can yield a tailored solution to help you. If you are 5 years or less away from retirement, don't try to figure this out on your own. Talk to a trusted advisor to discuss how to reposition some of your assets to protect yourself.
- https://www.nerdwallet.com/article/investing/average-stock-market-return