September > Retirement Corner
Surviving Market Volatility
In the current market conditions, it can be easy for some investors to be discouraged. However, there may be better ways to deal with this volatility than by pulling your money out of the market. Despite its volatility, the world economy has grown every year since Black Monday in October 1987, with an average annual gain of 3.7%.
In the past 81 years, there have only been four times in which the market failed to yield positive returns for two or more consecutive years. Each time, the negative returns were followed by above-average positive returns. Though this pattern is not guaranteed to repeat itself, it does illustrate the market's potential and suggests that if you stay focused on a regular investment plan, you could take advantage of a rebound.
Participants in employer-sponsored retirement plans, such as the UTSaver Tax Sheltered Annuity (TSA) and the UTSaver Deferred Compensation Plan (DCP), who stay the course may find themselves in a good position to benefit when the market rises again. When the market rebounds, investors who hung in there and waited out the cycle have seen the most growth in their portfolios.
What can you do now?
- Look at your fund allocation. Over time, your asset mix becomes unbalanced when one type of investment rises or falls significantly in value, causing it to either make up too much or too little of your overall portfolio. Sit down with a representative from one of the six authorized providers of the UT Retirement Program to see if now is a good time to rebalance your portfolio.
- Don’t get mad. As hard as it is, try to think rationally about your investments, and make sure to speak with your provider representative before taking any drastic action to change an investment strategy intended for the long term.
- Be prepared to contribute more. A market downturn can be a lot like a storewide sale — your money buys more when prices are low. If you have extra cash, consider taking advantage of mutual fund “bargains” while costs are down.
Article courtesy Lincoln Financial and Metlife Resources.