Hello Folks! Welcome to Our Blog.

Earlier this week, the stock fell freely. The Dow Jones plunged nearly 1,600 points, the worst drop in history during a trading day. At the time of writing this article, the stock market had recovered about half of the losses. But did that alarming drop make baby boomers wonder if they should keep investing in the stock market?

If so, the short answer is that it depends on your age.

The good news: Younger baby boomers have no reason to worry about the correction, says Kyle Woodley, senior investment editor at Kiplinger.com. Remember, the stock market crash of 2008 had a six-year payback time.

“If you’re in your 50s and 60s, there’s still time to recover,” Woodley says in a MarketWatch article, At what age should you be most concerned about a stock market downturn? “Fifty years ago, life expectancy was much lower. You are not investing for the next 5 or 10 years, you are investing for the next 20. You have room to grow your savings and participate in that growth. Half a century ago, you would have been in two-thirds bonuses at age 50. That is no longer the case. “

Financial guru Suze Orman agrees. “If you’re saving for retirement or another goal that’s 10 or more years down the road, you should be happy that stock prices are down,” he says. “When share prices are lower, your money buys more shares. And then you own more shares by the time share prices pick up.”

A general rule of thumb for your retirement money that you might consider is keeping your investment age safe, he adds. “So if you’re 60, you can have up to 60% in certificates of deposit or short-term Treasuries, and the rest can keep the stocks.”

Keep in mind that because the market has exploded in the last eight years, you may need to rebalance your retirement portfolio to ensure that your investments are in line with your tolerance for risk. Otherwise, you could lose a lot more money if the market crashes.

What if you’re older and planning to retire in the next five years, or maybe you’re already retired and draw from your retirement funds?

Some older boomers may have more reason to worry: Jared Snider, a senior wealth advisor at Exencial Wealth Advisors in Oklahoma City, says your risk depends on how well you’ve prepared for a recession. “People who have not prepared are the most affected. It can cause irreparable damage. They sell out of fear or out of necessity because they have no other assets to liquidate.”

Experts generally agree that you shouldn’t invest anything you need for the next five years. That way, you avoid withdrawing all of your money during a market downturn that has historically always risen again.

“If the market crashes, you will have to be able to weather the storm rather than sell everything in a panic,” writes Katie Brockman in a CNN Money article, How to Protect Your Retirement Savings From a Crash. “If you only invest money that you know you won’t need for at least five years, it will be easier for you to leave those savings intact until the market recovers.”

Leave a Reply

Inapurrear.com
Recent Comments