With the stock market losing ground more often than not lately, what should you do? If you find yourself a little nervous by this occurrence here are some ideas:

For investors in their 60’s and beyond

• Make sure your asset allocation (bond/stock mix) is suitable for your risk tolerance and age (utilize maxims like invest your age in bonds (a conservative approach) or invest 100 minus your age in stocks);

• Revisit (or create) your financial plan to make sure you are on retirement track;

• Be flexible and adjust your budget/withdrawal rate to reflect weaker market returns; and

• Ensure you keep a cash reserve/“bucket” of two to three years worth of living expenses on the side for down markets.

For investors in their 40’s and 50’s

• This group also needs to make sure their asset allocation (bond/stock mix) is suitable for their risk tolerance and age (utilize maxims like invest your age in bonds (a conservative approach) or invest 100 minus your age in stocks or mimic allocations found in appropriate target date funds); and

• Check the quality of your bonds, remembering that high quality, shorter duration bonds exhibit negative correlations with stocks and thereby provide a better ballast to ones portfolio during turbulent stock market times.

For younger investors

• Stay the course and add to your equity positions in these down markets; and

• Only invest in stocks money that you will not need for the next 5-10 years, money that is needed for shorter time horizons should be in short to intermediate term/duration bonds or cash accounts.

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