Long-term Investing and Market Fluctuations

January 22, 2008

Given the recent fluctuation in the stock markets, many retirement plan participants may have questions about their retirement investment goals. Remembering the value of investing for the long term can help participants consider those goals and use investment strategies that will help achieve them. For the long term investor, it’s time in the market, rather than timing the market, that may pay off as time passes. Weathering ups and downs over time can allow investors to benefit from longer-term market strengths, and to avoid the risks of attempting to time market changes.

Any investor focusing on long term goals should carefully consider his or her overall portfolio and how it relates to those goals before making any changes, even while the value of stocks may change suddenly at times. Creating a portfolio that matches the investor’s individual tolerance for risk can help prepare the investor for greater than typical volatility in the markets. Diversifying within that portfolio by choosing funds that invest in different types of companies and use different investment strategies can also reduce the investor’s concern over day-to-day returns.

ICMA-RC provides the following planning articles and resources to help your employees determine if their portfolios are on track with their retirement goals:

1. Keeping a Long-Term Focus Can Help Returns
2. Investing for the Long Term
3. Reduction of Risk Over Time
4. Investing Dos and Don'ts

These resources and more can be found on the Planning & Tools and Market View sections of the ICMA-RC Web site.

Your employees may also find it helpful to register to receive our Market View Mail every week. Sent by e-mail every Friday, the Market View Mail includes a summary of the markets for the week, a brief explanation of a different Economic Indicator each week and our Chart of the Week providing interesting insight into different areas of investing.