How to Protect Retirement Money from Market Volatility?

As you get closer to retirement and markets become volatile, it can hinder your years of diligent retirement planning and create extra anxiety. Make sure you know the right ways on how you can protect your retirement money from market volatility. Below are some of the strategies that you can follow.

1. Retain the Right Portfolio Mix

2. Diversification is Key

3. Never Run Out of Cash

4. Discipline Yourself About Withdrawals

5. Keep Your Emotions Out of the Way

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Dollar-Cost Averaging

Dollar-Cost Averaging (DCA) is a technique that means investing a fixed amount of money in the same stock at regular intervals over a long period of time. This is strategically a great way to invest in the long-term. As you buy more shares at a low cost, you lower your average cost per share over time. This technique is attractive to investors who are just starting to learn and invest. It’s a good way to gradually build wealth despite starting with a small investment.

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What is a ‘Falling Knife’ in Stock Investing?

“Never try to catch a falling knife!”

• The term ‘falling knife’ specifies a a sharp drop, but there is no specific magnitude or duration to the drop before it constitutes a falling knife.
• It is generally used as a caution not to buy a stock during a market drop.
• Traders will trade on a sharp drop, but they generally want to be in a short position and will use technical indicators to time their trades.

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Definition of Capitulation

What is ‘Capitulation’ in stocks?

• Capitulation is when investors give up any previous gains in any market by selling their positions during declining periods.
• Many market professionals consider it to be a sign of a bottom in prices and consequently a good time to buy stocks.
• The extent of a capitulation can only be understood after the fact.

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How to Adapt to a Bear Market?

Bear market is when a broad range of stock market indices fall more than 20% from a previous high. If it appears that a bear market could be around the corner, get your portfolio in order – by identifying the relative risks of each holding. A balanced portfolio is your best defense (also known as a hedge) against a bear market.

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