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You are here: Home / Personal Finance / Who Needs to Worry About the Stock Market and Why?

Who Needs to Worry About the Stock Market and Why?

October 6, 2021 by Jacob Sensiba 1 Comment

Earlier this week we saw the NASDAQ take a dive and Facebook lost 5% in one day. Volatility is part of the stock market. That’s how it’s been and I think that’s how it’s always going to be. Suffice it to say that the stock market is otherwise unpredictable and it’s something that investors are aware of. But who really needs to worry about the stock market?

Who needs to worry?

The complicated answer is, it depends. It depends on what you’re saving for, how old you are, and your time horizon.

Generally speaking, if you’re saving for retirement, the people closer to retirement need to pay attention to the market more than the younger people. That’s also why asset allocation is important. The closer you are to retirement, the more money you should have in less risky investments.

Time Horizon

If you have a short-term goal you’re saving for then you have to be a little more careful. If you’re saving for college, for example, the closer you get to having to use those funds to pay for college, the more conservative you’ll have to be.

What happens in the stock market only concerns people with a short time horizon. I actually should phrase it differently. What happens in the stock market SHOULD only concern people with a short time horizon.

Asset Allocation

When I say all of these things, I’m specifically talking about broad-based financial planning. People who are saving for a particular goal and are using asset allocation for their investments. Meaning they’re selecting mutual funds or ETFs that follow some sort of index. If you’re investing in specific stocks or thematic ETFs, then you probably have to pay a little more attention.

And I’m not saying that people with long-term time horizons shouldn’t pay attention to their accounts. I’m simply saying that they shouldn’t live and die on what the value of their account is day in and day out. Don’t worry about the stock market.

Related reading:

What Currently Present a Risk to Markets?

Why Asset Allocation Matters

Why Financial Literacy is Important

Disclaimer:

**Securities offered through Securities America, Inc., Member FINRA/SIPC. Advisory services offered through Securities America Advisors, Inc. Securities America and its representatives do not provide tax or legal advice; therefore, it is important to coordinate with your tax or legal advisor regarding your specific situation. Please see the website for full disclosures: www.crgfinancialservices.com

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Jacob Sensiba
Jacob Sensiba

My name is Jacob Sensiba and I am a Financial Advisor. My areas of expertise include, but are not limited to, retirement planning, budgets, and wealth management. Please feel free to contact me at: jacob@crgfinancialservices.com

 

Filed Under: Personal Finance

Comments

  1. Beau W. says

    October 7, 2021 at 7:10 pm

    What im worried about is the I bond rate will increase will be a great time for everyone to get a great interest rate finally!! The inflation report isn’t going to be pretty thats for sure.

    Reply

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