Remember the limbo? The younger you were, the lower you could go, partly because of height, but largely because of agility.
The stock market has been on a steady decline for weeks (following a steady climb before that and it is still above where we began 2012), and many are still reeling from the precipitous drop in 2008/2009.
So, how low can you go?
Youth certainly impacts your answer, but I think agility is just as important. What does that mean? If one or more of the following describes you, you are more agile:
- You are setting aside and investing a portion of your earnings each month
- You are fairly certain of your income (for example, salary vs. commission)
- You have other sources of income (social security, oil & gas, rental property, etc.)
- You have sufficient cash in your checking/savings account for an emergency
- You don’t plan to touch your investments for another 5-10 years
- You are getting advice, and using it, on your investments and taxes
- You plan to live another 15+ years
There are many global uncertainties hitting all at once right now, and we could be in for a rough summer. As I’ve said many times before though, investing isn’t for the short term. Declines present an opportunity to rebalance, in a tax-efficient manner, a well-diversified portfolio. If we knew when the stock market’s periodic tops and bottoms were going to occur, we could obviously do very well. Unfortunately, we don’t know that, so the next best thing is to stick with your long-term investment objective and rebalance when the market has made significant moves one way or the other. If you don’t know how to do this yourself, I’d be happy to talk with you about how Element Retirement & Investment Consultants can be your proxy in the investment limbo!