Earlier this week, the stock market fell freely. The Dow Jones index plummeted nearly 1,600 points, the worst fall in the history of the trading day. At the time of this writing, the stock market has recovered about half of the losses. But does this worrying decline make your baby boomers wonder if you should continue to invest in the stock market?
If so, the short answer is that it depends on your age.
The good news: Kyle Woodley, senior investment editor at Kiplinger.com, said that the young baby boomers have no reason to worry about corrections. Keep in mind that the recovery time for the 2008 stock market crash was six years.
"If you're between 50 and 60, there's still time to recover," Woodley said in an article in MarketWatch, "Why should you worry most about the downturn in the stock market?" "Fifty years ago, people's life expectancy was much lower. You will not invest in the next 5 or 10 years, and you will invest in the next 20 years. You have enough room to grow your eggs and participate in this. Before this growth, you would have won two-thirds of the bonds in your 50s. This is not the case."
Financial Master Suze Oman Agreement. "If you save for retirement savings or other goals for the next 10 years or more, you should be happy and the stock price falls," she said. "When the stock price is low, your money will buy more stocks. Then, when the stock price rebounds, you have more stocks."
She added that one rule of thumb you might consider for retirement is to keep your age safe investment. "So if you are 60 years old, you may have as much as 60% CD or short-term government bonds, and the rest can stick to stocks."
Keep in mind that as the market has soared over the past eight years, you may need to rebalance your retirement portfolio to ensure your investment is consistent with your risk tolerance. Otherwise, if the market crashes, you may lose more money.
What if you are older and plan to retire in the next five years, or if you have sometimes retired and retired from a retirement fund?
Some older baby boomers may have more reason to worry: Jared Snider, senior wealth consultant at Exencial Wealth Advisors in Oklahoma City, says your risk depends on how well you prepare for the recession. "Those who are not prepared are most affected. It can cause irreparable harm. They sell because of fear or out of necessity because they don't have any other assets available for liquidity."
Experts generally believe that you should not invest anything you need in the next five years. This way you can avoid all your money during the downturn in the market that has been reviving in history.
"If the market crashes, you need to be able to manage the storm instead of selling everything in a panic," Katie Brockman wrote in the CNN Money article "How to protect your retirement savings from collapse". "By investing only in funds you know you don't need for at least five years, you can more easily keep these savings until the market recovers."
Orignal From: Baby boomers: Should you move your retirement fund out of the stock market?
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