<strong>By Fred Gaskin</strong>

In our March column we discussed how to begin framing your retirement income expectations. We emphasized the need to remain flexible to changing market conditions, and adjusting your portfolios based on the market environment and changing personal views.

The markets have just concluded one of the most remarkable quarters for volatility, price movements, and uncertainty in memory. As a result, most investors - professionals and individuals alike - are trying to understand what, if anything, they should be doing with their portfolios. Hint, it’s not that complicated!

For many investors, a period of ongoing market volatility brings the ritual of tweaking their financial plans, confirming their portfolios reflect their goals and objectives, and most importantly, evaluating their tolerance for risk. Engaged investors are probably already adjusting their portfolios and income expectations for the short and intermediate term in our current environment.

For other investors, behaviors and responses are going to vary. While every investor is different, periods of volatility may/can be a wake-up call to make sure your portfolio is adequately diversified based on your goals and risk tolerance. Investors who are focused on long-term goals shouldn’t let short-term movement dominate their decisions, while investors who are nearing or in retirement may need to add defensive assets, such as cash or U.S. Treasury securities, for stability. It’s important to stay true to your financial plan and make decisions based on your goals and timetable, regardless of market volatility.<span class="Apple-converted-space">&nbsp;</span>

Navigating through rocky markets can be tough, but following practiced and proven investing principles might help you stay the course. Here are a few to consider:<span class="Apple-converted-space">&nbsp;</span>

1. Diversify your portfolio Portfolios that are highly concentrated in just a few securities can be very risky. Having money spread across different asset classes (or types of investments such as stocks, bonds and cash equivalents) is important because each can respond to the market differently. It’s not always the case, but when one is up, the others can be down. Deciding on the right mix can help cushion the blow during volatile markets. Here are a few quick questions to ask yourself:

Does your portfolio’s success depend too heavily on the performance of any single investment?

Are your holdings especially concentrated on a single industry, sector or country?

Are you less diversified than you think because different funds in your portfolio hold many of the same securities?
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 	<li>2. Determine your risk profile Investing involves taking risks, and you have to be honest about how much risk you’re willing to take with your money. Determining your risk tolerance informs how you should diversify your investment portfolio between stocks, bonds and cash equivalents. Higher potential rewards generally come from higher risks. Start with some simple questions:Do you need your portfolio to generate income now or in the near future?</li>
 	<li>Can you tolerate fluctuations in the value of your investments, financially and emotionally?</li>
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3. Take the long view In times of dramatic market volatility, each fluctuation may seem disastrous. However, emotional reactions to short-term market conditions can put you at risk for further financial loss. Markets typically go up and down, and even bear markets historically have been relatively short. According to the Schwab Center for Financial Research, the longest bear market was a little less than three years (915 days), and it was followed by a nearly five-year bull run.<span class="Apple-converted-space">&nbsp;</span>

Timing the market’s ups and downs is nearly impossible – instead, focus on staying diversified, know your risk tolerance and stick to your plan during tough times. For long-term investors, which are most of us, the strategy should be time in the market rather than timing the market.<span class="Apple-converted-space">&nbsp;</span>

Remember to use periods of market volatility to make sure your investments are diversified and take your risk tolerance into account. Finally, if you don’t have a financial plan, now is a good time to create one.

Fred Gaskin is the branch leader at the Charles Schwab Independent Branch in Bluffton. He has over 35 years of experience helping clients achieve their financial goals. Some content provided here has been compiled from previously published articles authored by various parties at Schwab.<span class="Apple-converted-space">&nbsp;</span>

Investing involves risk including loss of principal. Diversification strategies do not ensure a profit and do not protect against losses in declining markets.

The information here is for general informational purposes only and should not be considered an individualized recommendation or personalized investment advice. The type of securities and investment strategies mentioned may not be suitable for everyone. Each investor needs to review an investment strategy for his or her own particular situation before making any investment decision.

©2020 Charles Schwab &amp; Co., Inc. (“Schwab”). All rights reserved. Member SIPC.

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