Why Is There Such A Downturn In Investment Performance?
The markets are falling fast, and there’s a significant downturn in investment performance. Most investors think that the tumbling market performance is caused directly by the recession; however, there’s more to poor long-term investment performance than the recession. If you’re in the midst of retirement planning and are worried about your 401(k) retirement fund, then pay attention to this article, since it might mean the difference between a bare-bones retirement nest egg and your dream of a Florida retirement!
Many baby boomers are growing increasing nervous that overall long-term investment performance has been on the decline – but surprisingly, the fault doesn’t completely lie with the investment firms, investment advisors and other financial professionals who are helping you with your retirement planning. The major contributing factor to poor long-term investment performance has much to do with many investors’ inabilities to stomach a wildly fluctuating market. A recent study by Dalbar, Inc. found that a less-than-ideal holding period was responsible for the decline of investment performance, since many investors sought to sell their shares after only four to six years in the market, despite any long-term expectations or investment strategies.
Another major contributing factor to the downturn in long-term investment performance lies in the inability of investors to guess prime investing opportunities and timelines; in other words, investors are more likely to invest when markets on the rise. Due to this feeling of joie de vivre when the market boom is fruitful, many investors will move their money away from safe investments in the anticipation that they will still make money. Therefore, savvy investors will invest even during the slowest periods of economic growth, and always be sure to make safe investments. After all, just because the market might look like it could grow forever, doesn’t mean you should stop making smart investment strategies for your retirement savings!
If you’re headed towards retirement, keep strong during the tough times if you want to see a healthy long-term investment performance with your portfolio; your investment advisor will thank you for it!
For more information on smart retirement planning, visit www.kenhimmler.com, the IRA and 401(k) experts!
Authored by Kenneth Himmler, Sr.