Nearing Retirement? 

Expert Tips To Overcome Stock Market Jitter

According to S&P Global, the stock market has lost over 17% this year through August, as measured by the performance of the popular S&P 500 index.

With such volatility, it is prudent to reassess one’s asset spread ahead of a likely recession. Are you nearing retirement and wondering how much you should have invested in stocks?

Asset allocation refers to the subdivision of a portfolio between different types of investments (e.g., stocks, bonds, cash, real estate, etc.).

Your Stock Allocation for Retirement

Research shows asset allocation has a far greater impact on a portfolio’s returns and volatility than the specific investments chosen (e.g., which specific mutual fund, stock, or bond).

How can you address market and sequence risks with a retirement portfolio partly in stocks? You must maintain proper asset allocation as you approach retirement, enter it, and live through it.

There are four crucial questions to ask that will help you decide your stock allocation:

Your Ideal Asset Allocation

If losing 20-50% of your portfolio in a given year (recall that with bear markets, downturns of over 20% happen about every 3.6 years on average, while those exceeding 30% occur every 5.5 years) would see you head for the hills, locking in your losses, you shouldn’t be heavily invested in stocks.

What Is Your Risk Tolerance?

Making back bear-market losses usually takes many months or even years. This implies that you probably shouldn’t invest any money in stocks that you could need in the next few years.

What Is Your Time Horizon?

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