If you’re an investor with money in a 401k plan, the last few months have been challenging as the stock market goes from bull to bear territory. What’s the cause and what should you do? A local financial advisor has some tips.
On the New York Stock Exchange – another day of trading ends in negative territory. Or as Financial Advisor Kathryn Carlson of RBC Wealth Management puts it, “This is ugly, there is no doubt about it.”
The Dow Jones industrial average was down over 500 points Wednesday, before clawing back, as equities worldwide dropped, fueled by falling oil prices and an economic slowdown in China.
“It’s kind of the perfect storm of bad news,” said Carlson.
It is the kind of environment that Carlson says investors just need to ride out.
“At this point it’s probably too late to get out of the market,” said Carlson. “I’m not sure we’re at the bottom but I’m hoping we may be getting close to what might be the bottom.”
With the Dow down 15 percent from last summer’s high Carlson is fielding calls from clients wondering what to do. She says at this point it is best to sit tight.
“Once you are out when the market is this low, you’re going to find it really difficult to pull the trigger when you want to get back in,” said the financial advisor.
While everyone’s situation is different, Carlson says when the markets tanked in 2008 they came back strong and those who remained invested were rewarded.
“If you stayed in the market in 2008 you made back everything you lost and more,” Carlson said.
To help you sleep at night Carlson says hold a diversified portfolio. And for young investors consider the pull back a buying opportunity. Yet she and many other investors hope the market’s drama comes to an end soon.
In the last month the Dow has lost nearly 1,700 points – a drop of almost 10 percent.