Feeling nervous from stock market zigzagging? Here’s what to do

This can be troublesome if there is a mismatch.

“Taking on more risk than you’re comfortable with could cause you to panic and sell at the wrong time,” said Jim Shagawat, a certified financial planner, and president of Windfall Wealth Advisors in Paramus, New Jersey.

“Taking on too little risk could lead to lower returns than you had hoped for,” Shagawat said.

For instance, if you are a young retirement saver and have all your money in safer investments because you’re afraid of stocks, you run the risk of your return barely beating inflation over decades.

This is when a little education can be helpful.

Eric Roberge, a certified financial planner, recently showed a new, 30-year-old client how a portfolio she was considering would have performed during the 17-month bear market that lasted from October, 2007 to March, 2009, when the S&P lost 56.8 percent. The particular mix of stocks and bonds the client was considering would have lost 17 percent.

“It’s not all in or all out of stocks,” said Roberge, founder of Beyond Your Hammock in Boston. “When people realize that, it’s amazing how much more comfortable they are.”

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He also makes sure his younger retirement-saving clients understand it’s unrealistic to expect markets to consistently go nowhere but up.

“The conversation is that we’re looking at the long-term, and I show them the type of growth we can expect,” Roberge said. “I also explain that we can expect extreme ups and downs in the market before then.”

Meanwhile, if you are nearing retirement or already there, your portfolio likely is more insulated from stock price swings, especially if you are pulling income from it. Nevertheless, if market downturns weigh heavily on you, it’s time to consider adjusting your exposure to stocks and, therefore, the amount of risk you’re taking on.

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