When headlines are dominated by uncertainty and volatility, it can cause even the most seasoned investors to feel unsettled. But for those focusing on their retirement savings, these markets aren’t a time to retreat—they're a time to stay committed.
Diversifying retirement contributions can be an especially powerful tool during volatile markets, as any diversification can spread risk across asset classes, sectors, and geographies to help manage volatility. When one area of the market may underperform, a diversified portfolio can cushion losses.
A common investment principle known as dollar cost averaging suggests that investing a fixed amount of money on a set schedule, even during volatile periods, can help manage potential risk and contribute to your long-term financial plans. Over the long term, investing on a set schedule means you’re automatically picking up more shares without having to “time” anything, and that steadfastness has historically benefited investors.
Our William Blair wealth advisors recommend focusing on “time in” the market versus “timing” the market. Attempting to time markets can actually be one of the biggest mistakes investors can make, because missing just a few top-performing days can significantly reduce long-term returns.
While it’s understandable that investors can be uncomfortable with volatile markets, history shows that staying invested helps capture rebounds, which often come quickly after downturns. Periods of volatility are exactly when sticking to a disciplined, diversified approach matters most in saving and investing for retirement. It’s a regular and expected part of investing, so creating a plan can help you stay consistent during these times.
An investment policy statement (IPS) can serve as a helpful roadmap for both retirement and taxable accounts, as it outlines investment goals, risk tolerance, and strategies. Additionally, regular portfolio rebalancing keeps asset allocation in line with your IPS’ goals. Work with your William Blair wealth advisor to create an asset allocation designed to weather multiple market cycles and help you meet your long-term objectives.
Disclaimer
This content is for informational and educational purposes only and not intended as investment advice or a recommendation to buy or sell any security. Investment advice and recommendations can be provided only after careful consideration of an investor’s objectives, guidelines, and restrictions. The factual statements herein have been taken from sources we believe to be reliable, but such statements are made without any representation as to accuracy or completeness or otherwise. Opinions expressed are our own unless otherwise stated and are subject to change without notice.