Expert Offers Tips For Workers Who Are Nearing Retirement And Nervous About Volatile Stock Market
NEW YORK (CBSNewYork) -- It's been a bull market since the presidential election, but Monday marked the eighth straight day the Dow Jones Industrial Average was down.
As CBS2's Emily Smith reported, stocks started lower again in the morning, creating a buzz for financial planner Jason Reddish with his clients wondering what to do.
When asked if someone who plans to retire in six or seven years has enough time for his or her retirement plans to recover from a drop in the market, Reddish, a former Wall Street adviser, said: "That's a very hard question. But wouldn't you rather have your cash and your preservation of capital than try to catch another couple of thousand points and lose everything on the downside? And that's what you have to be very cautious of."
Reddish suggests liquidating half of your 401(k) or retirement plan into a money market account. That's a process that allows you to avoid any penalties because you aren't technically withdrawing it. If the market keeps going up like it has over the last several years, you're still half in.
"There's always adjustments. You always take that risk," one man told Smith. "But I'm optimistic about things."
"Keep the hope," said another man. "A lot of people that sold their stocks back when the market crashed 10 years ago wish they kept them now."
Analysts continue to forecast big swings. They're watching to see if President Donald Trump can get health care and other items through Congress. That's part of what creates uncertainty on Wall Street and emotional reactions.
"Wall Street likes to be certain when that information's coming through," Reddish said. "And when that information all of a sudden shows cracks, you could have an overreaction.
"The last 10 years, we've been on a bull market like we haven't seen in a long time. And bull markets correct, and then there's a bear market, then there's a bull market. And this is the cycle of things."
Experts say that historically elections have had minimal impact on the market over the long term. But if you are concerned about your 401(k) or retirement plan, it's a good time to make some changes.
CBS2's expert says that we can all take some comfort in knowing the Dow Jones has had an average return of 7 percent -- without adjusting dividends or inflation -- since the 1920s.
