Association of Military Banks of America

A Time to Panic or a Time to Hold Tight? Experts say Stick to Your Plan

Although we have seen a lot of turmoil in the market this week — the Dow Jones took a hit and scared some investors for sure — is that a reason to panic?  Experts say no; this is the most important time to “stick to your plan,” as a Thrift Savings Plan article this week put it.  Stay the course, TSP says: “Once you’ve established your retirement goals and a savings strategy that fits your needs, you’ll have the best results if you stick to your plan. Don’t get sidelined by distractions. Make adjustments to your strategy only after careful consideration.”

The New York Times suggested that we consider the context when looking at the decline as well, “This market decline so far has returned the market roughly to its level in mid-December, less than two months ago. The 7.8 percent drop in the Standard & Poor’s 500 over the last six trading days is similar in scale and speed to drops in January 2016 and August 2015, neither of which left lasting scars, and is short of the 10 percent drop that would qualify as a market correction.”

AMBA President & CEO, Steve Lepper, shared his personal experience in his last CEO Corner last Friday, on 2 February 2018 “Over time, as I learned more about money and the benefits of saving it regularly, I still buy high and sell low, but I also buy low and sell high.  That’s the essence of dollar cost averaging:  regular savings puts your money on the stock market curve, which, in the long run, has always gone up.  My message in a nutshell:  Americans need to save more money.  It’s the only way to turn a bumpy ride in the stock market to a smooth one.” 

It is easy to get panicked when you see a drop in the market and then check your investment accounts, however, Steve’s note, along with other experts, reminds us all to consider the context, your personal investment strategy, your time horizon and other factors before you make big changes.