Lots of news outlets this week headlined the stock market's worst point drop in history. And while this was true, as an investor it's important to make sure you're paying closer attention to the percentage, not just the points.
[AUDIO] Don't Watch the Points, Watch the Percentage
See through the headlines
Earlier this week many news headlines talked about the third worst point drop in history. However, it is nowhere near the worst trading day in history. While Dow Jones did indeed drop by 3.6%, which is not a good day in the markets, the headlines from media outlets oftentimes will highlight the historical point drop instead.
Don't derail your long-term plan
It's important to set proper expectations and long term goals when it comes to investing. One way to look at the recent market volatility is if your portfolio can't handle a 3.6% drop, then that money should not have been in the market in the first place. Bottom line, don't let the scary headline set you on an emotional discourse with your retirement plan.
Know the opportunities volatility creates
Volatility is an "up" and a "down". While we don't know exactly what's going to happen in the markets, there's always an opportunity when volatility arises. For example, now might be a tax advantageous time to do a Roth conversion. Consider this, a 3.6% drop in the market just gave you discounted tax rate money converted into a tax differed account.
If you need help navigating market volatility or have questions regarding your portfolio, please, give us a call at 320.222.4236 or email me directly at [email protected]