The markets have had a sharp downturn since their peak around a month ago. There is a continual inflow of new articles talking about the coronavirus, oil price wars, and the election. Articles are telling you to sell, buy, buy some now and buy some later, etc., while the author doesn't seem to know what to do themselves.
So what are we to do?
The simple answer to this question lies in the work that has (or hasn't) been done prior to the downturn in the market. Some considerations should be:
-The closer you get to a financial need/expenditure, the more conservative your investments should generally be.
-Proper diversification, according to your risk tolerance, is vital in order to maintain balance in the good times and the bad.
-If your need/goal is a good distance from today, your investments have more time to recover and potentially move on to new highs.
If you are saving for retirement or another goal, markets dropping from time to time can be desirable. Continue to invest monthly, and if the drop is more severe, consider investing more, if possible, at the lower prices.
In the long run, it is almost always a bad idea to sell an asset that has just dropped significantly in order to buy something "risk free". If those options are desired, fight the impulse to pull the plug on your investment until it has recovered.
As always, we believe a working, fluid, and comprehensive financial plan is essential to proper asset management and planning. Downturns should be an expected part of investing, and knowing how they affect your short and long term goals is important in keeping perspective throughout them. And remember, we are here to help!
This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events or a guarantee of future results. The information is based on data gathered from what we believe are reliable sources. It is not guaranteed by LPL Financial as to the accuracy and is not intended to be used as the basis for any investment decisions. The information presented does not constitute a solicitation for the purchase or sale of any security and is not a recommendation of any kind. Please consult your financial advisor before making financial decisions. Past performance is not a guarantee of future results. Diversification is an investment strategy that can help manage risk within your portfolio but it does not guarantee profits or protect against loss in declining markets.