Maybe you’re just a few months away from retirement, or your kid is about to start college in September — and now, you’re suddenly looking at a stock market that has declined about 6% in the past week. Is it time to panic?
MarketWatch spoke with several financial advisers and experts about how to react to market losses like those we’ve seen in recent trading days (and especially on Monday August 5th). Their advice? It’s generally wise to stay the course and not overreact, but there are nevertheless lessons that can be learned and steps that can be taken in response to such volatility.
Here are five takeaways.
So, should anyone be panicking?
As long as you’ve been investing in a sound way, with a portfolio that’s designed to meet your short- and long-term financial goals, the decline shouldn’t be an issue, the pros say. The point is that, for most people, investing is about meeting those goals over a period of time, not making a quick killing in the market.
So instead of looking at how much your investments have declined, you really should be looking at whether or not that decline has a significant impact on your financial future. In other words, it’s not about the S&P 500 itself, but about your personal rate of return and whether it’s where it needs to be.