If you’re already beyond the days of earning a paycheck or nearing that time, advisors say part of your portfolio should be protected from market gyrations to help prevent you from selling stocks at a depressed price when you need income.
“If there’s any portion of your portfolio that you think you’re going to spend in the next two years, you need to keep that out of the market,” said Nancy Coutu, a certified financial planner and co-founder of Money Managers Financial in Oak Brook, Illinois.
When it comes to people who are far from retirement, advisors generally say you should ignore the ups and downs of the market. That is, if you’re in it for the long haul, remind yourself that corrections — no matter how severe — are always followed by upswings in the market.
“Younger workers should put as much as they can afford in their 401(k)s and let it ride,” Coutu said. “When the market goes down, you’re buying shares at a cheaper price.”