A lot of people I speak to are furious and disappointed when their retirement portfolio invested in stocks is down. Especially people older than 50.
If you are one of these people, you are probably scared that more bad years will ruin your retirement. And you should be scared! It is hard to make up these losses, especially over a few years.
How are you going to gain back these losses, and prevent further losses?
You really have four choices at this point, and each of these has good and bad points:
1—Get rid of the stocks, and buy something else—real estate, gold, antiques, collectibles, crypto, etc. But buying these other assets may not be a good idea, because there is a high level of risk. Some of these investments are good in the long term, but we no longer have a lot of time, so if you go in this direction, be cautious, and limit the amount you invest. And realize that these investments are illiquid.
2—Convert everything to cash, and put it in a money market account or certificate of deposit. This is very safe. But with inflation the way it is, this choice is really just remaining even, (if that) and not gaining anything. It just preserves what you have.
3—Consider some annuities. There are many types available, including those that provide income for life. There are also short-term annuities that pay fixed rates higher than what banks offer, and a full return of your money in a preset number of years.
4—Or just keep it in the stock market as it is now, and pray that it does not go down more.
Here’s my recommendation:
1—You probably do want to keep some money in stocks, as long as you watch the account. If and when the market rebounds, this is one of two ways to participate in that rebound. But your investments should be in strong stocks, and not the risky stocks that everyone is talking about.
2—You probably do not want everything in cash, but you may want to put a small percentage of what you have in a liquid account paying 3% or more, to keep funds on the side for opportunities that will come up over the next few years.
3—I might recommend, depending on other factors, an annuity that meets the criteria listed above. There really is no downside risk. You will not have access to the bulk of the money you invest for the first five years or so, which means that this has to be money that you are able to let grow. The upside is that you are participating in some of the future market gain with no risk of loss, which is important. I am helping a lot of clients do this.
Please let me know how I can help.