home loan finance blog
Many of us are relying on the stock market for out retirement savings. I have a ROTH IRA and a Thrift Savings Plan (TSP) account that use the stock market to bring gains to my retirement savings. I have lost a little money on the S&P’s 500 4% downfall in the last two days. However, this shouldn’t matter for the long term over our 20 year career. Think of this as a opportunity to buy more shares.
Right now, I am in the 2010 lifecycle fund in the TSP because I anticipated a “correction” of the market. I am moving my $500 into to the 2020 fund where it should protect against some further correction but give me more growth than the 2010 fund. With my Roth IRA, I am still in the 2045 Vanguard fund with 90% stocks and 10% bonds.
I have $5,550 in that fund at this point. I lost about $400 with that drop but I am going to be buying $500 worth of shares next Wednesday(automatic contributions. I really like this fund because it has a low expense ratio and at the end of the year they do distribute dividends the end up to be about 2%.
So how can one protect against these drops in the market?
1. Don’t put all of your eggs in one basket: I have two retirement accounts with two different allocations.
2. Diversify diversify: Go with a mix with stocks and bonds depending on YOUR risk tolerates.
3. Get into funds that pay dividends. Yes, TSP does pay dividends more later on this subject.
So, don’t be afraid if the market goes down just think of it as a opportunity not loosing money. What ever goes down does come back up. The question is when?