Stocks Got You Down? How to Stop Worrying

Stocks Got You Down? How to Stop Worrying

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About the Author

Ostrom retired from the Air Force in 2000 after serving in a variety of personnel, education and training, and executive officer assignments. His assignments included tours in North Dakota, Florida, Korea, Australia, and the Pentagon. His final assignment was on the Joint Staff, writing and championing legislation related to joint officer personnel management issues. He earned numerous decorations and awards over his Air Force career.

After Air Force retirement, Ostrom was a practicing investment advisor at a large investment firm and a bank. He specialized in working with clients developing, implementing, and managing investment plans and portfolios.

A native of San Antonio, he earned a Bachelor of Arts and Master of Arts and is a graduate of the Royal Australian Air Command and Staff College and the U.S. Air Command and Staff College.

Ostrom joined the MOAA staff in 2006. His responsibilities include researching and writing articles and answering member inquiries regarding military benefits, health care, survivor issues, and financial concerns. He also travels extensively to discuss these matters with servicemembers and retirees and their families.

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The stock market might finally be correcting. Do you find yourself worrying about your investment portfolios?

If your portfolio management has to flex to the crisis du jour, you need a better plan. An investment plan based on crisis management is a plan that won't work.

Good portfolio management expects the unexpected. Proper portfolio management is about managing to the risk. In this case, the risk of a downward market. Tomorrow, the crisis will be something else.

Money is invested to earn a return that offsets the damage of taxes and inflation over time and provide excess returns to build wealth. Short-term volatility is a given. Long-term gains are the objective. For your long-term money to work harder than you, you - as a regular contributor - actually need the markets to go down.

[RELATED: 3 Tips to Get the Most Out of the BRS]

For average people to build wealth for long-term needs, the investment markets must go down. You need a portfolio strategy designed to take advantage of the short-term drops in the markets. Short-term drops are our only chances to buy at sale prices before the markets continue their constant movement upward.

So is this possible correction a big deal? Absolutely. It's driving down the markets so our next contribution to our 401(k)s, Thrift Savings Plans, or IRAs will take advantage of lower prices. You should expect market drops, plan for them, and take advantage of them.

 

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