Why Retirees With Enough Cash Don’t Panic When Markets Drop

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Why Retirees With Enough Cash Don’t Panic When Markets Drop By: Marc Guberti Marc Guberti Marc Guberti is a personal finance writer who hosts Breakthrough Success, a podcast where he teaches listeners how to grow their businesses and achieve personal transformations. Has also written: How to Help Recession‑Proof Your Retirement Portfolio With Gold (and When to Hold Off) My Mom Invested $10,000 in Silver, Is Now Is in Debt and Wants to Refinance Her Home. What Should I Do?

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Getty Images The stock market is a great wealth builder over the long run, as long as you can resist panicking during downturns. Dips in the market are normal, but how investors react to those dips can hurt or harm their portfolios. The best investors stay calm when markets are volatile, and these financial habits can help you stay the course. Must ReadExperts are Bullish on Gold — Here's How to Get InWhy Retirees Are Turning to Gold as a Buffer Against Stock Market LossesWarren Buffett on Market Volatility — and 3 Ways You Can Take Advantage Have a cash buffer Before you invest, it’s important to have an emergency fund that can cover three to six months of your expenses in case of the unexpected, like job loss or a surprise bill. Knowing that you can cover the essentials can help you stay calm when you see red in your investment portfolio. For some investors, it makes sense to have even more cash on hand. Retirees, for instance, may want to have a three-year cash buffer, since their time horizons are shorter than those of younger investors and they have less time to recover from market downturns. You can put your funds into a high-yield savings account so that it’s still earning some interest.

Gold Investor Kit Offer: Sign up with American Hartford Gold today and get a free investor kit, plus receive up to $20,000 in free silver on qualifying purchases Reframe ‘losses’ as ‘discounts’ You probably don’t complain when your favorite items go on sale at the mall, so think of a market downturn as stocks going on sale. Dips present buying opportunities. If you continue to contribute to your retirement savings accounts and invest in your brokerage account when prices fall, you’ll be getting more stocks for your money.

Start Trading Smarter: Try Robinhood’s online trading platform and place your first trade on them Consider your time horizon You should think of money you put into the stock market as money that’s allocated for mid- and long-term goals, not the short term. Ask yourself if you need this money in the next five years. If not, then it likely makes sense to invest in the stock market and stay the course when the market drops. For many savers, the time horizon for long-term goals like retirement can be 20 years or more. Extra Money: Get up to $1,000 in stock when you fund a new active SoFi invest account Automate your investing If the market drops and you panic, you might be tempted to hold your cash on the sidelines until prices recover. But that means you’re missing out on the market recovery. Set up automatic transfers so a portion of each paycheck goes to your investments. If you have an employer-sponsored account like a 401(k), you’re probably already doing this. Automating your investing can take the emotion out of it, and removing emotion can help you avoid panicking. Don’t constantly check your portfolio Turn off the news, log out of your brokerage account and focus on non-financial activities to keep your mind off short-term panics. You can’t control or time the stock market, and obsessively checking your portfolio won’t help. Instead, focus on what you can control: Having a cash cushion and investing for the long term. Must ReadExperts are Bullish on Gold — Here's How to Get InWhy Retirees Are Turning to Gold as a Buffer Against Stock Market LossesWarren Buffett on Market Volatility — and 3 Ways You Can Take Advantage