Local financial adviser: Don't make rash moves with retirement plans in uncertain times


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As with any period of political change, the recent election has led some to wonder how it might impact their financial plans or if it should spur them to change their retirement planning. 

“There can be a lot of angst when it comes to people looking at their 401(k)s,” David Cole, of Mt. Pleasant, SC-based Cole Financial, LLC, told Palmetto Business Daily. This is particularly true during economic calamities, or following an election, he said.

But any short-sighted decisions made in connection with retirement during these times is “typically self-destructive,” Cole said.

“This investment is for the long haul, and that long haul should be based upon a portfolio individuals are comfortable with," he said. “If you start moving it around, you could be hurting yourself down the road.”

Some angst over retirement plans during times of political or economic upheaval is natural, but making any move on that basis can be self-destructive, financial experts said.

Even in the wake of the 2008 crash, few holders of 401(k)s panicked and radically changed their portfolios. Less than 1 percent made any major changes as a direct result of the crash, fund manager Vanguard said.

Among investors who held 401(k) positions between 2009, when the market hit bottom after the financial crisis, and 2014, the median account balance returned 137 percent, Vanguard said in an article in Time magazine.

Those 401(k) investors continue to buy when prices are lower, benefiting hugely when the market recovers.

“It’s a real advantage not to have to make a conscious decision to buy when the market is tanking,” behavioral finance expert Meir Statman at Santa Clara University told Time.

Trump’s election, and uncertainty over his policies, or other such events are not reasons to make rash decisions on your portfolio, Cole said.

“Every president has a policy, and whatever that policy is, it may or may not affect the market,” Cole said. “The bottom line is that short-term events should not determine the management and makeup or your retirement portfolio.”

It makes sense to make decisions based on how old you are, and then how you feel about the risk, Cole said.

For example, individuals may start making decisions to switch from stocks to more conservative bonds the closer they are to retirement. That is sensible from a risk point of view, Cole said.

Trump did not address 401(k) investments in his policy documents. Some Republicans in Congress do want to tweak the program to allow a lifetime income stream via annuities.

David Cole offers securities through The O.N. Equity Sales Company, Member FINRA/SIPC, One Financial Way, Cincinnati, OH 45242   (513) 794-6794.

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