Month: January 2020

After one of the longest bull markets in history, many investors are worried about a stock market decline, and that is natural. Markets have cycles, and even if another financial crisis is not impending, even minor downturns can be troubling. But you can take steps to protect your portfolio from market volatility by following these three tips.

Review your asset allocation. Take a look at your asset allocation before you are tempted to make changes based on emotion. Make sure your portfolio is diversified. How much do you have invested in stocks, bonds, and cash? Is it still appropriate for your growth goals and risk tolerance? Although diversification can’t protect you from a loss, it may help cushion your overall portfolio from significant declines.

Invest a little at a time. If you are still contributing money to a retirement account, you may want to contribute a little at a time instead of all at once. This is called dollar-cost averaging, and it can help manage risk.

Because the amount you invest remains constant, you are able to buy more shares of a stock or mutual fund when the price is low and fewer shares as the price rises. Over time, your average cost per share could be lower than the investment’s average price per share.

Hold steady. Some investors attempt to overcome market volatility by trying to time the market, jumping in on an upswing and jumping out on a downswing. But it’s difficult to predict how financial markets will react to any specific situation or event. You have to be right twice: when you sell and when you buy. So, stick it out.

Although past performance is no guarantee of future results, historically, the markets have always rebounded. From 1957 through the end of 2018, the S&P 500 Index has returned roughly 8%.

You may not be subject to estate tax, which is applied to estates with values that exceed the exclusion limit set by law, but that does not mean you should avoid estate planning.

Here are five tasks for everyone to consider that fall under estate planning.

Check your beneficiaries. If you have filled out beneficiary designation forms for your financial accounts (such as your life insurance or 401(k) plan), they override any other estate planning documents, so review them and ensure they are up to date.

Create two wills. That is correct: two wills. You need a living will to indicate how you would like to be cared for if you become unable to express your wishes, and you need a last will and testament to explain how you’d like your assets distributed after your death.

Draft two powers of attorney. You also need two powers of attorney to indicate who will handle your affairs if you are incapacitated. One will specify who will handle healthcare decisions, and another will specify who will handle financial matters. You can designate one person to handle both.

Designate guardians if necessary. If you have children, you will want to name a guardian to look after them (day to day and financially) if you are unable to care for them.

Name an executor. When you die, your executor will make sure your assets are distributed in accordance with your will. You can specify a family member or a professional, such as a bank trust officer.

Just be sure to tell your executor that you have named him or her.