The stock market’s volatility in recent months has left many investors feeling uneasy. However, financial experts say that now is not the time to panic and sell off investments. Charles Payne, host of “Making Money,” believes that the current market downturn presents an opportunity for investors to build their portfolios for the long term.
He says that investing in the stock market is a lifelong endeavor and that the sooner you start, the better off you will be. “Everyone should be a long-term investor,” Payne says. He encourages investors to maintain core positions in their portfolios while being open to trading with a smaller portion.
Payne notes that despite 35 recessions since 1854, the American economy and stock market have always bounced back. He believes that downturns should be viewed as opportunities rather than threats. For retirees, it may be wise to pause systematic withdrawal plans during sharp market declines.
These plans automatically sell mutual fund investments to generate monthly income, but lower fund values mean more units need to be sold. Retirees may consider cashing in more bond investments instead, giving struggling stock investments time to recover.
Payne’s investment strategies for volatility
Investors saving for retirement may want to consider a Roth IRA conversion when their Traditional IRA or 401(k) balances are lower. This triggers an immediate tax liability, but future growth is tax-free. Investors can choose to convert specific securities with the sharpest losses.
High earners can take advantage of tax-loss harvesting throughout the year. Investments valued below the purchase price can be sold, and the losses can offset capital gains. Up to $3,000 in excess losses can offset ordinary income, with the rest carried forward.
Ultimately, experts say that the decision to rebalance a mutual fund portfolio should depend less on market noise and more on personal milestones, discipline, and evolving financial circumstances. Investors should resist chasing high returns based on trends and instead stick to a well-thought-out plan. Significant market movements, life events, tax changes, and annual reviews are all good reasons to consider rebalancing.
Keeping an eye on sector performance can also uncover growth opportunities. Regular rebalancing helps maintain the desired risk level and supports long-term financial success.
