Already, investors and professional analysts are referring to Monday, August 25th, 2015 as “Black Monday.” In response to a severe and still building economic crisis in China, U.S. stocks lost over 3%, the Dow Jones Industrial Average alone losing more than 500 points. It was a surprise to most people, and it ended up taking away a lot of money from almost everyone’s retirement savings. Those that were hit the hardest were those that are planning on retiring the soonest, unfortunately, simply because they will not have as much time to rebuild before they need access to their money.
Events like this happen from time to time and there’s very little that you can do to avoid losses to your portfolios when they do. However, experts do say that there is an easy way to help yourself recover more quickly when a significant drop like this does happen. The best time to put more money into your investments is when markets are down, the common advice goes. And most of the time, this is completely true. Times like this are perfect opportunity to load up your variable annuities and other retirement accounts simply because there is now more room for them to go upward in value.
This is great advice for those that are able to invest more on a moment’s notice and for those that still have a few years before they need to worry about retiring. Markets go up on the whole, but this doesn’t necessarily mean that markets will go up every single day. Markets, on any given timeframe, are likely to be going up and down as they oscillate to find the most efficient price. This is normal, and it’s how people that buy and sell over the short term make money. But, this isn’t the best way to save for retirement. For one, it’s too risky to stake your future wellbeing on. Two, if you do it over the course of years, the fees and commissions will add up and eat into your savings. And finally, it is a very time intensive thing to do. This is why we have professionals manage our money for us. It can be attractive, but the vast majority of people will benefit just from buying and holding if their selections are initially correct.
And while we use the general upward trend of the major indices such as the Dow to our advantage over the long term to get ready for our retirement goals, we don’t have to be slaves to the short term ups and downs that naturally take place in a negative way. Instead, we can use them to our advantage. By putting in money when it will be most effective, such as after a huge dip in prices, we can use the ups and downs that happen to help us grow our money faster. We can’t do anything to prevent these, so we might as well profit from them.
How you do this is entirely dependent upon your and your financial position. Some people can simply call up their advisor and have him or her transfer money from one account to another. Others will need to meet with someone to open up a new account. If this latter is your position, it might be too late to take advantage of this particular dip in the market, but now is a good time to prepare for the future. Just be aware that some types of investments, such as certain fixed rate annuities and certificates of deposit, do not allow you to add more funds into after a certain period of time has passed. Take this into consideration when you are attempting to use the investing strategy described above.