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How to navigate a bear market by your age



How should a 30-year-old deal with the current stock market downturn? How about someone nearing retirement? We asked the experts

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How should you invest in a bear market? Experts say it all depends on what you hope to do with the money – and how long you can afford to wait before selling.

“Your age matters when it comes to a bear market,” says Anessa Custovic, Chief Investment Officer and Investment Advisor Representative at Cardinal Retirement Planning, Inc. “But it’s really about when you plan to spend the money.”

For example, a 20-year-old planning to buy their first home in their 30s can use the bear market to their advantage. By investing now and cashing out a decade later, you can benefit from significant market growth – and if the market is still bearish ten years from now, you can always continue to rent.

A 30-year-old planning to buy their first home in the next few years might want to consider a different investment strategy — or, in some cases, the security that comes with putting their down payment in a high-yield savings account or CD ladder.

What about other long-term financial goals, like retirement? How can you navigate the bear market to your advantage, whether you’re 20, 30, 40 or 50?

We asked two investment experts to share their advice. Here’s what you need to know.

In this article:

How to navigate a bear market in your 20s

If you put together an investment portfolio in your 20s, you’re in luck. By buying into a bear market, you can invest while stock prices are relatively low – and if you buy before the market recovers, you can get a lot more bang for your buck.

That said, the first rule of investing is not necessarily buy low, sell high. Its never invest money you can’t afford to lose.

Brendan Halleron, Certified Financial Planner® professional and partner at Affiance Financial, advises young investors to build their emergency funds before they get too excited about buying into a bear market. By setting aside three to six months of expenses in advance, you are less likely to find yourself in a position where you have to sell your investments before they have had a chance to grow.

Once you have your emergency funds set aside, you can take advantage of today’s share prices. “Provided you have a cash reserve to fall back on for any unexpected expenses,” says Halleron, “a bear market can be a good time to buy stocks.”

How to navigate a bear market in your 30s

Many people in their 30s have decades left before they retire — giving them plenty of time to see their investment portfolios grow in a potential future bull market. That’s why Halleron and Custovic agree that people in their 30s can navigate today’s bear market much like people in their 20s.

“For investors who are still in their early accumulation years,” says Halleron, “a bear market can be a good time to buy.”

Custovic notes that thirty-something investors should be prepared for both buy and hold. “You have to make sure you stick with it,” she says, “and that your investments are in a diversified portfolio.”

She suggests focusing on well-established stocks, ETFs or funds – and avoiding risky investments like cryptocurrency. “Just because you’re young doesn’t mean you should gamble with your retirement fund,” explains Custovic.

How to navigate a bear market in your 40s

Investors in their 40s can still take advantage of the low prices offered in a bear market – especially if you view the current market decline as an opportunity to buy stocks.

“If you could buy a home you really wanted, knowing it might be worth more in the future, you’d probably do it without hesitation,” Halleron explains. “Why not think similarly about stocks in a bear market?”

That said, people in their 40s should still follow the first rule of investing – never invest money you can’t afford to lose. With fewer years left until retirement, you may want to start shifting some of your investments toward lower-risk options, even if that means missing out on potential market growth, regardless of your long-term risk tolerance.

“When you’re in your 40s, you have to start making some more defensive choices,” advises Custovic. “You still want to take advantage of a prolonged bear market and continue to invest in well-diversified equity markets, but you have to think about diversifying into other asset classes.” This may mean putting more of your money into fixed income investments such as certificates of deposit (CDs) and certain types of bonds and annuities. “Try to get more stability in your portfolio.”

“A bear market can be a good time to buy stocks.”

—Brendan Halleron, Certified Financial Planner® professional and partner at Affiance Financial

How to navigate a bear market in your 50s

“If you’re in your 50s and thinking about retiring in your 60s,” says Custovic, “you definitely want to start positioning yourself more defensively.”

By now, you’re probably thinking seriously about retirement — and whether you’re planning to quit your job as soon as possible or build your career as long as you can, you’ll want to make sure your investments will be ready for you when you need them.

In some cases, this may mean that you divide your investments between fixed income products and shares. This way, you can sell the fixed income investments while the market recovers and give the stocks time to grow.

“You might want to consider insurance products or annuities,” advises Custovic. “You’ll have an income floor to draw on in retirement, and you can let your other investments recover the value they lost during the prolonged bear market.” Custovic also suggests using T-bills to your advantage. “Roll T-bills so that all the new money goes into stable investments, and take advantage of those investments when you start withdrawing money in retirement.”

This income-focused investment strategy can be applied whether the market is bearish or bullish. More importantly, it can offer fifty-something investors peace of mind – even during a prolonged market downturn.

“Instead of worrying about market headlines, focus on the activities you can control,” advises Halleron, “like staying healthy, maintaining employment, spending less than you earn, systematically contributing to your investment accounts, and balancing regularly.”

That way, you’re not only prepared for a good retirement, but also a good life – no matter what the market does next.

Our editorial policy

Haven Life is a customer-centric life insurance agency supported and wholly owned by Massachusetts Mutual Life Insurance Company (MassMutual). We believe that navigating life insurance decisions, your personal finances and overall well-being can be refreshingly simple.

Our editorial policy

Haven Life is a customer-centric life insurance agency supported and wholly owned by Massachusetts Mutual Life Insurance Company (MassMutual). We believe that navigating life insurance decisions, your personal finances and overall well-being can be refreshingly simple.

Our content is created for educational purposes only. Haven Life does not endorse the companies, products, services or strategies discussed here, but we hope they can make your life a little less difficult if they fit your situation.

Haven Life is not authorized to provide tax, legal or investment advice. This material is not intended to provide and should not be used for tax, legal or investment advice. Individuals are encouraged to obtain advice from their own tax or legal advisor.

Haven Life Insurance Agency (Haven Life) does not provide tax, legal or investment advice. This material has been prepared for educational purposes only and is not intended to provide, and should not be used for, tax, legal or investment advice. You should consult your own tax, legal and investment advisors before entering into any transaction.

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