Akron Life September 2022

FINANCIAL PLANNING

“If an investor has too much risk and they’re looking at statements and losing sleep, it’s not worth it,” he says. “Those investors can look for ways to increase the amount of insula tion they can have in their port folio and still be positioned to achieve their longer term goals.” That could mean migrating toward safer investments, but that should rarely mean com pletely pulling out of the stock market during a downturn. Rieke explains that puts you in the position of doing the oppo site of the golden rule of buy ing investments low and selling high. Instead, you are selling low and buying high, which could lead to a catastrophic loss. “While they may have made a move that gives them short term relief, the long-term consequences … could be dev astating,” he says. MARKET SMARTS Those who have cash available to invest should do so now because a bear market is a buyers’ market, which means prices are low. “The type of stocks that typi cally get put on the biggest dis count tend to be growth stocks that can provide significant returns over time,” Rieke says. “That’s a very powerful strategy.” He recommends buying good-quality, dividend-paying, defensive stocks. “The bear market lets us buy shares of dividend-paying com panies at depressed prices,” he says. “The dividend income that we get from those invest ments will end up being a higher percentage than before we went into the bear market.”

Sectors that have held up well in the bear market and may still be attractive now are energy, utilities, consumer staples and health care. Young investors should buy now and let returns recover and grow over time, but older investors might need to strategize more. Rebalancing your portfolio to have less risk are significantly down. Others may be up in value. The bear market is a terrific time for an investor to sit down and look at ways to bring their portfolio targets back to where they were before,” Rieke says. “Getting everything back in balance is a very prudent activity that all investors can benefit from.” An example he offers is taking some money you might have in international bonds and moving it into high-quality U.S. investment-grade corpo rate bonds, which could make the fixed income portion of your portfolio more stable over the next several years. If cash is available, adding more to your portfolio by investing in more stocks can also help get your portfolio back to target levels. Opening a traditional brokerage account at a financial institution can add another vehicle with tax benefits to your portfolio. Rieke cautions that liquidat ing assets while their values are down can cause retirees serious long-term consequences. There are a few ways to avoid this situ ation. Older investors who are transitioning to retirement can try to reduce what they have budgeted to spend from their investment portfolio and allow exposure could be helpful. “Some parts of the portfolio

investments and eliminate that emotional roller coaster that comes with it. If you still need more growth during your retirement, you will likely need to stay invested in the stock market, but you might move toward lower volatility, high-quality defensive stocks. While it’s about growth, invest ing is also about maintaining a portfolio that doesn’t give you scares and offers you peace of mind about your future. “Along with your adviser, have an investment strategy that has your portfolio contain the right blend of safety and growth,” Rieke says. “When combined, they’re going to give you the kind of growth you need in bear markets and tough win dows of time.”

more time for recovery. Another way is making short-term safer investments. Because of the rising interest rates, short-term fixed-income investments, like certificates of deposit, short term bonds and exchange-traded funds, are paying more. “Those investments give the rest of their portfolio breath ing room that it needs to get through the bear market, recover the losses and be no worse for the wear,” Rieke says. ACT NOW Remember that investments are only one part of your portfolio, Rieke says. Sit down with your adviser and reassess your finan cial plan as a whole. If you’ve accumulated enough money for retirement and have valuable assets like real estate, you can greatly decrease your exposure to higher volatility growth

[ Managing Editor Kelly Petryszyn is an adventure seeker and an avid supporter of #TeamFiona. ] Comments? Email them to Kelly Petryszyn [kpetryszyn@bakermediagroup.com].

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