As the Federal Reserve has announced the largest increase in the federal funds rate since 2000, here are two investments to take a look at if you are looking to retire soon or have already retired.
Inflation is rising, the stock market is volatile and now the Federal Reserve has raised interest rates – but investors, as always, should steer clear of any major changes, financial advisers said.
This type of mayhem in the market can be stressful, advisers acknowledged, but retirement savers and investors should stay their course and stick to their investment plans.“Long-term investors should not make any major changes to their balanced portfolios based on the direction of interest rates or stock market volatility, but stick to their financial plan,” said Jon Ulin, a certified financial planner and chief executive officer of Ulin & Co. Wealth Management.
Now is a good time to focus on emergency savings, advisers said. Savings accounts and money market accounts have had very low interest rates in recent years. Rising interest rates will change those bank account returns for the better, but slowly and still not anywhere near what retirees would need to fight inflation .
The sequence of return risk is the possibility of taking from an account when it’s dropping from a stock market downturn, which results in potentially lower returns in the future. “The Great Recession of 2008-2009 taught us many lessons,” said Thomas Scanlon, a certified financial planner at Raymond James Financial Services. “The sequence of returns really matters. If you are planning on retiring and taking distributions during a bear market, watch out.
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