Stop, Drop and Roll

We get it. When markets are bouncing around like ping-pong balls dropped from a helicopter, the temptation to do something can be overwhelming. Quite often, though, the best response may be to step back, take a deep breath and ride it out. Here’s a checklist to help you figure out what to do next when it seems like the financial world is collapsing around you.

1. Remain calm

Human beings are hard-wired to react quickly in stressful situations. But with your retirement account, the best option may be to simply sit tight and ride it out; markets can be incredibly resilient.

2. Double-check your asset allocation plan

Diversifying your money across different kinds of investments (like stocks and bonds) can help you weather ups and downs. When things get crazy, your balances can quickly get out of whack: double check your account balances to make sure you’re staying aligned with your long-term plan.

Asset allocation and diversification do not ensure a profit or protect against loss in declining markets.

3. Consider upping your contribution

It goes without saying that many successful investors “buy low and sell high.” When things get choppy, the market may be presenting you with a buying opportunity. Contact your financial advisor to determine when the time is right to increase your contribution.

4. Think about consolidating accounts

Keeping track of multiple accounts (like old 401(k)s and IRAs) is tricky even when times are good. When things get rough, think about consolidating into a single account so you can get a complete picture of how your money is allocated.

Consider all your options and their features and fees before moving money between accounts.

5. Get some help

Still tempted to “just do something?” Maybe it’s time to get some professional help. Consider whether a managed account solution might be right for you.

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Asset allocation, diversification, dollar-cost averaging and/or rebalancing do not ensure a profit or protect against loss.

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