Inflation and bear market concerns abound. What can you do to maximize your savings during retirement to avoid negative growth?
Following years of market growth and economic positivity, we find ourselves in a downturn. Times like these may give you pause about portions of your retirement assets, like your 401(k) or investments you’ve made in an IRA, but panic or rash moves are never the answer.
With a variety of asset vehicles and strategies that can be used to side step economic concerns, downturns can actually be used to your advantage. Bear markets can be exploited for growth and equities can be considered as a long term path to beat inflation and continue the growth of your nest egg.
Read on to learn the best ways to maximize your savings during retirement.
Reflect and Regroup
Context is important when weighing financial concerns. Inflation at some level is the result of massive growth. Consequently, bear markets reflect the reduction in demand which drives the value of the market down.
How do we use these typically negative situations and turn them into a positive? First off let’s note that interest rates are coming down. In June of this year rates were as high as 9.1%, with reported rates in August down to 8.3%. If rates continue to lower, this can mean positive momentum for the market going forward.
In terms of the current bear market, this is the perfect time to consider investment opportunities. Bear markets historically last 289 days, while eventual bull markets can last several years. This means that the gains, and time to grow in a bull market, should far outweigh the losses of a bear market.
Use this thought process when considering your current financial situation. Slow the panic, evaluate your situation and consider the options below to grow your portfolio.
Options to consider
- Gold: Gold is the – well – gold standard as a hedge against inflation. It’s a tangible asset, generally stable and especially well suited to situations where a nation’s currency may be taking a downturn.
- Real Estate: Real estate prices are dropping, nationally after the massive boom we witnessed in the last two years. How long will this downturn last? It’s difficult to say, but like bear markets, we can expect the downturn to eventually head in the right direction. Like any other investment, consider your position and the value of what you’re considering buying into.
- Equities: As mentioned, the current bear market can offer great opportunities in stock investing. From 1926 to 2019, eventual bull markets have lasted 6.6 years on average and produced total returns of 339%. If your position allows, consider investing while value presents itself.
- 401k & IRA Contributions: If your employer happens to offer a generous 401k match, this can be a great opportunity to maximize investing especially in a bear market. Why? Your money will be invested pre-tax and you have the added benefit of your employer pitching in. The same can be said for an IRA, a financial tool that you can open today.
- Start Today: Whatever financial tool you choose to employ, the key is to start as soon as possible. The earlier you begin, the more risk you allow and the more time your money has to compound.
Beware of Risk
While the above investments can prove profitable for many investors, risk is fundamental to the investment process.
Stocks, bonds, mutual funds and exchange-traded funds can lose value, even all their value, if market conditions sour. Even conservative, insured investments, such as certificates of deposit (CDs) issued by a bank or credit union, come with inflation risk. They may not earn enough over time to keep pace with the increasing cost of living.An investor needs a substantial level of experience and sophistication to know what they really mean, or an experienced investment advisor needs to take the time to explain it to the investor carefully. Yet, all too often, these conditions do not prevail.
As an investor, it’s crucial to know how much of your money you could lose and what circumstances could cause this to occur. If you are uncomfortable with the risks of the investment, remember there are always lower-risk alternatives.
Partner With APO Financial
APO Financial was born after the 2008 Great Recession, with our mission specifically formed around preserving wealth and weathering difficult financial times.
Whether you’re currently in retirement or starting to invest today, APO Financial can help. Schedule a call with us today and let us help you maximize your savings so that your retirement can be as fulfilling as you want it to be.
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