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What to do (and not to do) after a market crash – Retirement investing

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What to do (and not to do) after a market crash – Retirement investing

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The current market conditions both locally and globally have been quite disastrous to say the least. This has seriously impacted on members of retirement funds and their retirement savings and has caused massive panic. The worst thing for any investor to do in poor market conditions is to panic. Panic causes one to make hasty, impulsive decisions. Instead one needs to stay calm, focused and seek financial advice where possible. Remember that every time the market has collapsed, it has also picked up again.

Time in the market is a lot better than timing the market.

Below are some important things to keep in mind:

  • Retirement savings are a very long-term investment. Don’t let short term volatility impact your decision-making and objectives.
  • Retirement savings are, in most cases, invested in the investment market and are open to investment market risk.
  • Poor market conditions present a better buying opportunity. In poor market conditions you get more units for your money than you would have in good market conditions. What that means is that when markets do pick up again, you have more units to benefit from. Buy low, sell high. Not sell low, buy high which is the mistake most people make in poor market conditions.
  • Time is your friend. Staying invested and not panicking is the best thing to do. Give the market the time it needs to recover and be part of that recovery rather than making hasty and poor investment decisions.
  • Don’t jump into making hasty investment switches. Switching is the worst thing to do because it means that you lock in losses that you have incurred within the investment portfolio. As mentioned above, time is your friend, stay invested and make up those losses when the market recovery starts to happen.
  • If you are close to retirement, don’t panic. Most retirement funds these days allow you to remain invested once you reach retirement and to defer your retirement benefit withdrawal for a later stage. Remaining invested allows you to try and make up some of the money already lost. Get the right financial advice and make the correct decisions.

These are just some of the important things to keep in mind. History has shown us that after a market crash there has been a recovery. Remain invested, stick to your investment objectives and plan and ride out the volatility. It is important to always get financial and expert advice before doing anything.

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Shameer Chothia is currently an Employee Benefits Consultant at Momentum Consultant and Actuaries. He is the chairman of the Rhine Stone Body Corporate and the Founder and Head Financial Coach at LMS Financial Coaching. Shameer is deeply passionate about financial literacy and education. He truly believes that there is duty to empower people with education, which makes a difference in their everyday lives. To achieve this, he founded LMS, actively changing lives by empowering people with financial knowledge

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