CORPUS CHRISTI, Texas — Inflation.
Recession.
You’ve heard these words come up for some time now. So, what impact would these concepts have on your 401k?
“The very first thing is this: Do not let short-term volatility spook you,” financial services professional Luis Sanchez said.
Sanchez said it’s common for people to have a knee-jerk reaction. But from the start, people should have a plan for any situation.
“First and foremost, you got to have a strategy and stick with it," said Sanchez, who is certified in handling retirement income. "Be well-diversified, not just in your asset classes, but your investments.”
Sanchez said market volatility is common, so, looking at the big picture: your 401k could turn out OK on the other side.
Sanchez uses the example of three people who had $10,000 in their accounts.
“Investor A says you know what? ’08 happened — my advisor told me this was going to happen, I have to stay the course," Sanchez started to say. "They have $43,000 at the end of the rainbow in 2021.”
He goes on to explain Investor B decided to pull their money and in a year put it back in. They would end up with $28,000. Investor C pulls their money altogether. They would end up with $5,000.
Every person has their own situation.
So, what if you still have decades left to work?
“If you have enough time, if you’re 30 years old, you’ve got 30-plus years to work, make sure that you create a buffer asset," he. said. "Something that’s safe whenever the market is down that you can dip into, that’s not correlated to all the volatility that’s out there.”
What if you’re thinking about retiring within a year? For Sanchez, the key is, again, diversifying.
“These types of things will happen," said Sanchez. "And its all about, again, being diversified. So, what we try not to do and what we don’t do is ever predict the market. We just prepare for what the market’s going to do.”
Sanchez suggests if you’re thinking of making any market decisions, to contact your financial advisor.
According to a retirement study by Charles Schwab, workers feel like they need to save at least $1.7 million.
For the latest local news updatesclick here, or download the Action 10 News App.
