Riding It Out: Strategies to help survive the ups and downs of the market

While visiting an amusement park this summer may not be possible for everyone, the stock market has provided a number of exhilarating rides to make up for it. Following are some tips for holding on.

Keep a big-picture perspective. While past performance doesn’t guarantee future results, history may provide some comfort during turbulent market times. Over time, the stock market has historically risen despite significant economic challenges (see below).

From January 1, 2000, through December 31, 2019:
• The S&P 500 delivered an average annual return of 7.68%.
• Bonds (Bloomberg Barclays US Aggregate Bond Index) delivered an average annual return of 5.08%.
• Cash Equivalents (90 day T-bill*) delivered an average annual return of 1.79%.
• Inflation averaged 2.17% a year.

Source: Kmotion Research; Callan Institute, https://www.callan.com/periodic-table/. Past performance does not guarantee future results.
* 90 day T-bill is a short-term debt obligation backed by the Treasury Department of the U.S. government.

Be flexible during the downturns. Look for ways to spend less if you’re already retired, or invest more if you’re still working.

Make sure you maintain an emergency fund (generally 3 to 6 months of living expenses — preferably closer to 6). It may keep you from dipping into retirement accounts during market downturns.

Keep your time horizon in mind. If you won’t need the money for years, you have much more time to recover from any setbacks.

Don’t self-isolate on your investments. Before taking any actions, talk to a spouse or partner, trusted friend, or family member who, of course, has your best interests in mind. Then talk to a financial professional who can provide sound advice based on your specific circumstances.

Securities and advisory services offered through LPL Financial, a Registered Investment Advisor, Member FINRA/SIPC. Insurance products offered through LPL Financial or its licensed affiliates. The investment products sold through LPL Financial are not insured Field & Main Bank deposits and are not FDIC insured. These products are not obligations of the Field & Main Bank and are not endorsed, recommended or guaranteed by Field & Main Bank or any government agency. The value of the investment may fluctuate, the return on the investment is not guaranteed, and loss of principal is possible. Field & Main Bank is not a registered broker/dealer and is not affiliated with LPL Financial.
The LPL Financial Registered Representatives associated with this site may only discuss and/or transact securities business with residents of the following states: Kentucky, Alabama, Florida, Indiana, Missouri, Ohio, Tennessee, and Virginia.

There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk. Contributions to a traditional IRA may be tax-deductible in the contribution year, with current income tax due at withdrawal. Withdrawals prior to age 59 1⁄2 may result in a 10% IRS penalty tax in addition to current income tax. The Roth IRA offers tax deferral on any earnings in the account. Withdrawals from the account may be tax-free, as long as they are considered qualified. Limitations and restrictions may apply. Withdrawals prior to age 59 1⁄2 or prior to the account being opened for 5 years, whichever is later, may result in a 10% IRS penalty tax. Future tax laws can change at any time and may impact the benefits of Roth IRAs. Their tax treatment may change.

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