Are You Prepared for the Next Market Decline?

  By Matthew Jentner
Matthew Jentner

Are you prepared for a market decline? The market retreats on average one out of every three years. Market corrections should not come as a surprise. But those who try to time when to be in and out of the market in anticipation of market advances and declines have a poor record of success.

What should you do?

1.)    Start by determining what your near-term cash needs are. Whatever you need for college tuition, a car purchase, a kitchen remodel, or a family vacation within the next year or two should not be in the market. Speculating on short-term returns is just that—speculation!

2.)    How does your investment allocation look? If a portion of your investment portfolio is over-weighted because of favorable returns over the past several years, rebalance your portfolio.  Review your target allocation periodically and rebalance it by capturing gains on the over-weighted asset classes and investing the proceeds into the under-weighted asset classes.

3.)    Remember to continue investing something out of every paycheck, no matter what the financial news is.  By depositing a portion of every paycheck into your diversified portfolio, you will dollar-cost average into the market, automatically buying more shares when the market is low and less shares when the market is high.

Take advantage of inevitable market corrections by avoiding short-term speculation, rebalancing periodically, and dollar-cost averaging a portion of every paycheck. This is not rocket science but good common sense. But it is up to you to just do it.

For more insight, listen to Jentner Wealth Management’s weekly podcast by clicking here. Or download Jentner’s white papers on The Four Cornerstones of Prudent Investing and The Active Versus Passive Investing Debate.

Are you prepared for a market decline? The market retreats []
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