Navigating today’s world can be quite unsettling, but don’t let that lead you to rethink your retirement investment strategy.
Historical patterns demonstrate that most people who try to predict market movements often miss the mark.
Consider the chaotic events we’ve witnessed recently: California grappling with fierce wildfires, New Orleans facing an unprecedented snowfall, and the curious return of the QAnon Shaman—these moments have certainly added to the whirlwind of unpredictability.
Yet, despite the instinctual urge to react to such developments, altering your retirement investments isn’t the best course of action.
Stick to Your Strategy
From the very beginning of this column, I have championed the use of low-cost, passively managed index funds as a reliable investment approach.
The concept is straightforward: invest in these funds, contribute consistently—ideally through automatic deposits—and let your investments grow undisturbed by the noise of daily headlines.
If you’ve adhered to this method, you’re likely witnessing positive results by now.
Over the past ten years, the stock market has faced significant challenges, including during the COVID-19 crisis.
However, history shows us that the markets generally recover from setbacks fairly quickly.
Many believe they’ve successfully navigated the market’s fluctuations, but the reality is that the majority, even seasoned professionals, struggle with timing their investments.
Often, those who don’t see the returns they hoped for fail to recognize that sticking to a passive investment strategy could have yielded better outcomes.
Historical Insights
Political shifts can trigger anxiety regarding investment choices, but data indicates that roughly 80% of U.S. presidents have overseen stock market growth during their tenure.
Keeping this historical perspective in mind provides a solid foundation for anticipating similar outcomes with future leaders.
If retirement is on the horizon and you plan to start making withdrawals soon, steering your investment strategy towards more conservative options is wise.
However, for those with a longer time frame, maintaining your established strategy—despite market ups and downs—remains the best advice.
Your 401(k) or IRA should serve as a steady anchor amidst the unpredictability of the times, providing you with peace of mind and one less worry as we navigate through these tumultuous waters.
Source: Above the law