What To Do During An Uncertain Stock Market

Russia’s invasion of Ukraine has exacerbated an already jittery stock market. It wasn’t too long ago when the Dow peaked at 36,799.65 on Jan 4th, 2022, and has since fallen more than 8%. Likewise, the S&P peaked at 4,796.56 and has fallen more than 10% during that same time.

Commentary on Russia’s invasion has run the gamut from stories suggesting the conflict will be over in a few days to the world being on the brink of World War III. In addition, Russia’s veiled threat of a nuclear strike has heightened geopolitical concerns worldwide. As a result, investors are worried about their 401(k)’s and other retirement investments. Some investors are wondering about the advisability of selling stocks to cash.

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What should you do?

While it is impossible to predict what will happen to the stock market over the next few days, weeks, or months, now is the perfect time to reassess the ‘safety net’ aspect of your portfolio.

  • If you are retired: Retirees who are withdrawing money regularly from their investments to support living expenses and lifestyle should maintain a minimum of 3 years worth of withdrawals in a safety net of less-risky assets such as money markets, CDs, and high-quality bonds. This safety net might be 10 years or more for more conservative investors.
  • If you are within 10 years of retiring: As you approach retirement, you should begin to build your safety net rather than waiting until your actual retirement date. For example, if you are 5 years away from retiring and want to have a 10-year safety net, you might set a goal of moving 2 years’ worth of safety-net funds from stocks to fixed-income investments each year. If the stock market is down significantly on your planned transfer date, hold off selling stocks until the market has recovered. This could take several months or years in a significant downturn (market correction or bear market). It is essential to have a plan in place.
  • You are more than ten years from retiring: If you are more than 10 years from retirement, your portfolio should be dominated by a diversified basket of stocks, stock mutual funds, or ETFs. However, now is a good time to reassess your feelings about the advisability of having a larger emergency fund. Normally, we would recommend everyone have an emergency fund equal to 3-6  months of living expenses invested in primarily money market accounts, short-term CDs, or short-term bonds/bond funds. Make sure you are comfortable with where you are right now. Maybe you would feel more comfortable with a 12-month, 18-month, or 24-month emergency fund until this geopolitical situation is resolved.

Every situation is unique. Be sure to consult with a financial planner to discuss your options and see what plan is right for you.


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Stewart H. Welch, III, CFP®, AEP, is the founder of THE WELCH GROUP, LLC, which specializes in providing fee-only investment management and financial advice to families throughout the United States.  He is the author or co-author of six books, including 50 Rules of Success J.K. Lasser’s New Rules for Estate, Retirement and Tax Planning- 6th Edition (John Wiley & Sons, Inc.); THINK Like a Self-Made Millionaireand 100 Tips for Creating a Champagne Retirement on a Shoestring Budget. For more information, visit The Welch GroupConsult your financial advisor before acting on comments in this article.


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