Third, if you’re not sleeping and you and your partner are fighting and you simply can’t take it anymore, try to exchange a major catastrophe for a minor catastrophe. Sell a little bit of your stocks for bonds or cash. In essence, sell to the sleeping point (ie, your comfort level). Then never go back to your previous, more aggressive asset allocation mix. You have discovered, like many investors before you, that your risk tolerance was not what you thought it was. You’ll need to save a little more money and perhaps work a little bit longer, but if reducing your stock market exposure by five to 10 percent prevents the financial catastrophe of going to cash at the bottom of a bear market, it will have been worthwhile.
Stock market downturns are expected events. By incorporating a plan to deal with them into your written investment plan, you can avoid bad investor behavior and reach your financial goals.
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ACEP Now: Vol 38 – No 02 – February 2019Pages: 1 2 3 | Single Page
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