Website design By BotEap.comLast week we witnessed the stock market hit a record correction with a 12% drop. Oh. It’s like we stubbed our toe in the middle of the night. We didn’t see it coming and it hurts. Our reaction is to limp towards the light. If we could see, it would make things a little easier, knowing which direction to move.

Website design By BotEap.comBut where are we going? And how do we protect ourselves in the future?

Website design By BotEap.comIt is important to note that while we feel bad, the markets have not done anything wrong. However, in fact, market corrections are healthy. In fact, they help point us towards the mean averages. The timing of all this provides us with unique investment opportunities that allow us, as investors, to buy companies at a less expensive price.

Website design By BotEap.comHow should I invest if I can’t handle the market crash?

Website design By BotEap.comThe straight answer, don’t be afraid when the market turns volatile. This is the entry price when you invest in the stock market!

Website design By BotEap.comIf this last week made you nervous, you didn’t sleep or you just got fed up, you probably have too much risk in your portfolio.

Website design By BotEap.comConsider this week’s bounce as a great opportunity to rebalance your allocations, thereby reducing risk. It may also be a good time to take some of your profits, add short market covers and raise some cash.

Website design By BotEap.comHow Much Investment Risk Should You Take When You Retire?

Website design By BotEap.comFor starters, look at your risk level. As a retiree or near-retirement, you might consider 40% bonds and 60% stocks. Of course, these numbers are adjustable, based on your individual plan.

Website design By BotEap.comHow do you know if this is right for you? Go back to your retirement plan. If you don’t have one, start now.

Website design By BotEap.comWord of advice: Your retirement and investment plan will need to change when the market changes. Stay away from amateur financial advisors who settle on a cookie cutter approach. Words buy and hold are not what you want to hear! There is a better way! But a retirement plan is a must.

Website design By BotEap.comSecond, review your return sequence risk. What’s that? A sequence of returns risk reviews a fund’s withdrawal risk, especially for retirees who make withdrawals during a bear market.

Website design By BotEap.comIt is more than a rate of return or the amount of a loss. This is a withdrawal calculation of withdrawal + time + market conditions to determine if you will run out of money or not.

Website design By BotEap.comIf you’re retired in the distribution phase of your life, your focus should be on your retirement income, NOT the rate of return. So, as mentioned above, you may want to start a conversation with your advisor about your market exposure and your income investing exposure.

Website design By BotEap.comStocks are risky, bonds pay very little. Do I still invest in stocks?

Website design By BotEap.comThe short answer is yes. It is advisable to have exposure to stocks in your overall portfolio. Statistically, people are living longer, and having more opportunities for high returns will help them greatly in their retirement years over time.

Website design By BotEap.comFor example, if you look at earmarked funds within retirement plans, they are responding by holding large amounts of shares for at least the first part of the retirement years.

Website design By BotEap.comYou can determine the amount of risk you are comfortable with by conducting a risk assessment. By doing so, you can get a good picture of what a 10%, 15% and 20% market decline will look like on your portfolio to help you determine what you are comfortable with and how much to hold in stocks.

Website design By BotEap.comWhat is happening with the Bonds?

Website design By BotEap.comLet’s talk about jumps. Currently, they offer low interest rates, however, when interest rates rise, the stock market tends to react negatively. So when we see the Federal Reserve start raising rates, they should, but not so fast that it limits economic growth.

Website design By BotEap.comLast week the 10-year Treasury rose to 2.9%. Currently, this rate appears to be our BANG point where the stock market does weird things. So, as the Fed has indicated that it will raise rates to keep inflation in check in 2018, they may need to reconsider their plan to continue economic growth.

Website design By BotEap.comIf interest rates continue to rise and the Fed continues to cut its purchases of outstanding bonds, we could see an uptrend starting in bonds.

Website design By BotEap.comWhere the rubber meets the road

Website design By BotEap.comEven though the market has stumbled in the last week, I advise you not to sell everything and put it in cash. Quite; use the current rally to reduce and rebalance portfolio risk, adjust those hedges as needed, and slightly (not fully) increase cash positions.

Website design By BotEap.comAlso be diligent and aware of market conditions (use the 5 minute market update or real time updates) but always remember that bull markets will come to an end. The prudent strategy is always risk management and making sure your long-term retirement goals remain stable.