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Yahoo
16 hours ago
- Business
- Yahoo
I'm an Economist: 4 Bits of Investing Advice Amid Turbulent Trump Market
Since President Trump took office for the second time, the market has been on a wild ride largely due to implementation of mass tariffs, causing many Americans nearing retirement and those who have already stopped working to panic for their 401(k)s. For You: Check Out: 'I looked at my 401(k) this morning and in the last two days that's lost $58,000. That's stressful,' recent retiree Victor Fettes, 54, told NBC News. 'If that continues, I can't stay retired.' With the market in continuous flux, Trump's tariffs threaten to increase prices and inflation. And Americans are feeling financially strapped. Many are worried about their golden years and whether they should invest. While there's no one size fits all answer, there are several things to consider, according to experts. It's scary to shell out money for investments when the market is uncertain. One benefit to investing during such economic instability is you can often buy stocks at a lower price and sell them at a higher cost later. However, individual situations vary. Tracy Shuchart, Senior Economist at NinjaTrader, advised to take note of Russell Investments' comprehensive analysis of 31 U.S. recessions from 1869 to 2018. 'Historical evidence strongly supports continued investment during periods of economic uncertainty, despite the counterintuitive nature of this approach,' she stated, referring to the data revealing 16 out of the 31 recessions produced positive stock market returns. She explained, 'Market timing presents significant challenges that argue against attempting to avoid volatile periods entirely and that Russell Investments' research demonstrates beating a buy-and-hold strategy over 150 years would require correctly predicting 77% of market turning points — a level of accuracy that proves elusive even for professional investors.' Looking to the past to see how the country endured previous economically challenging times can help forecast how future recessions will fare, and determine a financial path that will build long-term stability even during shaky times. Discover More: A volatile market can create a lack of confidence when it comes to investing, but there are calculated systems that can work during turbulent times such as the dollar-cost averaging strategy. It involves investing a fixed amount in regular intervals, whatever the amount is. According to Shuchart, this method 'provides both mathematical and behavioral advantages during volatile markets.' She explained further that 'this mechanism reduces the average cost per share over time, while eliminating the need for timing decisions.' Amy Pridemore, a financial wellness instructor at Virginia Commonwealth University, agreed that dollar-cost averaging is the way to go. 'This action allows individuals to create healthy savings behaviors regardless of current market trends,' she explained Pridemore went on to say that 'money will be invested when the market is down, money will be invested when the market is up — this 'set it and forget it' approach provides wins for investors all around.' Another approach Shuchart recommended was quality focus — investing in companies with solid fundamentals, consistent profitability and a strong history of growth. 'Companies with strong balance sheets, consistent earnings, competitive advantages and experienced management teams typically demonstrate greater resilience during economic stress, and often emerge stronger when conditions improve,' she explained. Quality focus can reduce the risk, while creating the opportunity for a potential big payout, according to The Economic Times. Making a big financial decision under distress can lead to a shattering outcome, and cause you to leave money on the table. According to Shuchart, BlackRock's analysis of S&P 500 performance from 2005 to 2024 demonstrated the severe consequences of missing market recovery periods: Remaining fully invested: $717,046 (from $100,000 initial investment) Missing the 5 best days: $452,884 (37% reduction) Missing the 25 best days: $158,792 (78% reduction) A rushed choice about financial matters doesn't always end well. When making investment decisions, it's vital to think long term. 'The economy has shown fluctuations and recovery,' Peter Reagan, financial market strategist at Birch Gold Group, stated. 'It will continue to do so.' He explained, 'Having investments that have shown their strength of preserving wealth across these fluctuations is something to remember before even considering selling any investments.' Editor's note on political coverage: GOBankingRates is nonpartisan and strives to cover all aspects of the economy objectively and present balanced reports on politically focused finance stories. You can find more coverage of this topic on More From GOBankingRates 5 Types of Cars Retirees Should Stay Away From Buying This article originally appeared on I'm an Economist: 4 Bits of Investing Advice Amid Turbulent Trump Market Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
16 hours ago
- Business
- Yahoo
I'm an Economist: 4 Bits of Investing Advice Amid Turbulent Trump Market
Since President Trump took office for the second time, the market has been on a wild ride largely due to implementation of mass tariffs, causing many Americans nearing retirement and those who have already stopped working to panic for their 401(k)s. For You: Check Out: 'I looked at my 401(k) this morning and in the last two days that's lost $58,000. That's stressful,' recent retiree Victor Fettes, 54, told NBC News. 'If that continues, I can't stay retired.' With the market in continuous flux, Trump's tariffs threaten to increase prices and inflation. And Americans are feeling financially strapped. Many are worried about their golden years and whether they should invest. While there's no one size fits all answer, there are several things to consider, according to experts. It's scary to shell out money for investments when the market is uncertain. One benefit to investing during such economic instability is you can often buy stocks at a lower price and sell them at a higher cost later. However, individual situations vary. Tracy Shuchart, Senior Economist at NinjaTrader, advised to take note of Russell Investments' comprehensive analysis of 31 U.S. recessions from 1869 to 2018. 'Historical evidence strongly supports continued investment during periods of economic uncertainty, despite the counterintuitive nature of this approach,' she stated, referring to the data revealing 16 out of the 31 recessions produced positive stock market returns. She explained, 'Market timing presents significant challenges that argue against attempting to avoid volatile periods entirely and that Russell Investments' research demonstrates beating a buy-and-hold strategy over 150 years would require correctly predicting 77% of market turning points — a level of accuracy that proves elusive even for professional investors.' Looking to the past to see how the country endured previous economically challenging times can help forecast how future recessions will fare, and determine a financial path that will build long-term stability even during shaky times. Discover More: A volatile market can create a lack of confidence when it comes to investing, but there are calculated systems that can work during turbulent times such as the dollar-cost averaging strategy. It involves investing a fixed amount in regular intervals, whatever the amount is. According to Shuchart, this method 'provides both mathematical and behavioral advantages during volatile markets.' She explained further that 'this mechanism reduces the average cost per share over time, while eliminating the need for timing decisions.' Amy Pridemore, a financial wellness instructor at Virginia Commonwealth University, agreed that dollar-cost averaging is the way to go. 'This action allows individuals to create healthy savings behaviors regardless of current market trends,' she explained Pridemore went on to say that 'money will be invested when the market is down, money will be invested when the market is up — this 'set it and forget it' approach provides wins for investors all around.' Another approach Shuchart recommended was quality focus — investing in companies with solid fundamentals, consistent profitability and a strong history of growth. 'Companies with strong balance sheets, consistent earnings, competitive advantages and experienced management teams typically demonstrate greater resilience during economic stress, and often emerge stronger when conditions improve,' she explained. Quality focus can reduce the risk, while creating the opportunity for a potential big payout, according to The Economic Times. Making a big financial decision under distress can lead to a shattering outcome, and cause you to leave money on the table. According to Shuchart, BlackRock's analysis of S&P 500 performance from 2005 to 2024 demonstrated the severe consequences of missing market recovery periods: Remaining fully invested: $717,046 (from $100,000 initial investment) Missing the 5 best days: $452,884 (37% reduction) Missing the 25 best days: $158,792 (78% reduction) A rushed choice about financial matters doesn't always end well. When making investment decisions, it's vital to think long term. 'The economy has shown fluctuations and recovery,' Peter Reagan, financial market strategist at Birch Gold Group, stated. 'It will continue to do so.' He explained, 'Having investments that have shown their strength of preserving wealth across these fluctuations is something to remember before even considering selling any investments.' Editor's note on political coverage: GOBankingRates is nonpartisan and strives to cover all aspects of the economy objectively and present balanced reports on politically focused finance stories. You can find more coverage of this topic on More From GOBankingRates 5 Types of Cars Retirees Should Stay Away From Buying This article originally appeared on I'm an Economist: 4 Bits of Investing Advice Amid Turbulent Trump Market
Reuters
18-03-2025
- Business
- Reuters
Choppy Trump policies, stocks drop has some rethinking retirement plans
March 18 (Reuters) - Victor Fettes, 54, is going ahead with his long-planned retirement next Friday. But the recent decline in the stock market and uncertainty over how U.S. President Donald Trump's policies will hit the economy have him rethinking how he'll spend it. Get a look at the day ahead in U.S. and global markets with the Morning Bid U.S. newsletter. Sign up here. 'I'll say I'm nervous,' says Fettes, a senior director of risk management and compliance at Verizon, who has been preparing to leave the workforce by 55 ever since he and his wife got married and bought their first house. He feels the Trump administration's rapid policy changes are causing problems in the government and the economy. He's concerned that Social Security and Medicare won't be there when he or his older relatives need them. And then there's the $70,000 that the stock-market drop erased from his and his wife's retirement savings since the start of the year. 'It's scary because as you see that start to dwindle... that's money you won't be able to count on later,' he says. He's postponing a trip to South Africa, and plans to meet with his financial advisor next week to decide whether to move into more conservative investments. 'My grandfather lived well into his 90s,' he says. 'So, you know, I'm like, okay, I've got to plan for the next 40 years. And do we have enough to make it for two of us through the next 40 years? That's concerning.' More than $4 trillion in stock market value has evaporated since Trump took office less than two months ago, reducing the value of retirement fund accounts that many people nearing the end of their working lives have spent decades building. Markets have been unnerved by Trump's leveling of steep tariffs on major trade partners China, Canada and Mexico and on key products like aluminum and steel. Those actions and threats of increased levies on other countries and products have ratcheted up expectations of a costly trade war that could fuel inflation and weigh on economic growth at the same time. Mass firings of federal workers and cuts to government spending also are causing uneasiness, and recent surveys show business activity is cooling while consumers are pulling back on discretionary spending and have become increasingly worried that tariffs will mean rising prices. Treasury Secretary Scott Bessent says Trump's policies on trade, taxes and deregulation will create a 'transition,' not a crisis, even as he said he could not rule out a recession. All that uncertainty has complicated the path for people trying to prepare for retirement. In late February, Emory University finance professor Tucker Balch changed up his retirement account, which had been 75% U.S. stocks. It's now 90% short-term bonds, with 5% in U.S. copper, steel and aluminum stocks he figures will benefit from Trump's tariffs, and 5% in Chinese stocks. "If (tariffs) really do continue to roll out, there's no way that cannot lead to inflation," the 62-year-old said. He believes the Federal Reserve will have to keep interest rates high instead of cutting them to support a weakening economy. "I'm just stepping off the escalator for a little while until we know for sure that we're back on an upward trend." Fed policymakers meeting this week are expected to leave short-term borrowing costs in the current 4.25%-4.50% range as they take more time to assess how Trump's actions are impacting the economy. Vicki Knight, a retired educator who teaches yoga part time to supplement her income from Social Security and her retirement fund, a mix of stocks, bonds and annuities, is worried. "I would have thought by now, at age 70, I could comfortably begin withdrawing from my retirement and do things that I really would like to do, like travel and not work as much," she said. "I feel like I might have to work more rather than less now, because the prices of things are going up so much, and it's just harder and harder just to make the money that I do make, including my Social Security income, stretch out to be enough to pay for my groceries, to pay for my mortgage, to pay for my electric and gas bill."
