Whether you’re an older worker with seemingly few options to recoup significant investment losses, or a younger worker with minimal or no investment savings at all, don’t let a difficult financial climate scare you into not taking any action at all.
Take stock of your situation and formulate a plan by starting with the basics:
- Pay down debt: Reduce the chokehold that credit cards have on your budget. Pay off the highest interest-rate card first, and then apply that payment to the next-highest interest-rate card. Stop charging!
- Spend less: Identify needs vs. wants, and then set priorities. Many so-called “needs” are actually wants in disguise.
- Rebalance your stock portfolio: Do your investment choices reflect your risk tolerance and investment strategy?
- Keep some liquidity: Consider stashing some cash—perhaps three to six months of living expenses—in a money market account at Louisiana USA, which is insured to at least $250,000 by the National Credit Union Administration.
- Increase your contributions: Many stock prices are at low. If possible, bump up your contribution.
- Diversify: Spread your wealth among a variety of investments: domestic, international, financial services, technology, health care and so on.
- Use dollar-cost averaging: By having just $50 each paycheck automatically directed to a mutual fund, your contributions will purchase more shares when the price is low and fewer shares when the price is high.
- Work longer: If you’re close to retirement, consider hanging on to your current job longer than planned, if you can. Or, secure part-time work after retirement. This reduces the number of years you’ll dip into your investments and helps build additional savings.