Tackling retirement when market volatility strikes

Next on MaltaCEOs.mt’s Work and Wealth Watch series, where money coach Luca Caruana gives his expert responses to all your questions related to money, work and wealth, we explore the challenges that market volatility brings to investment, especially when one is approaching retirement.

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Dear Luca,

I hope this letter finds you well. I am writing to you in a state of anxiety over the recent downturn in both the stock and crypto markets. Having been a diligent investor for the past decade, I have experienced market fluctuations before, COVID-19 being a notable example. However, this current situation feels particularly jarring, possibly because I am approaching retirement.

I am a business consultant, soon to retire, and my wife and I have been looking forward to a life of travelling and enjoying our hard-earned savings. The sudden shock to my investments has left me deeply concerned about our financial future and the lifestyle we have planned.

With all our investments tied up in stocks and some crypto exposure, the fear of future downturns, especially if a bear market emerges, is causing significant stress.

While I understand that markets have their cycles, the timing of this downturn couldn’t be worse for someone in my position. I would greatly appreciate your perspective on how to tackle these turbulent times and secure our future.

Thank you for your guidance and support.

Best regards,

Concerned Investor

Luca responds

Dear Concerned Investor,

Thank you for reaching out and sharing your concerns. It’s natural to feel anxious during such unpredictable times, especially when you are nearing a significant life milestone like retirement.

First and foremost, it’s important to remember that market fluctuations, while unsettling, are a regular part of the investment landscape. Historically, markets have shown resilience and an ability to recover over time. Trusting in this long-term recovery can be a key strategy in managing anxiety and maintaining a balanced perspective.

Your situation reminds me of the 2008-2009 credit crunch, which affected many individuals’ retirement plans. Many found themselves in a difficult position due to overly concentrated investments. It’s crucial to avoid a similar scenario by considering a more balanced investment approach.

While it’s essential to consult with a professional financial advisor to tailor any decisions to your specific situation, there are generally less volatile options available, such as bonds and treasury bills, which tend to provide more predictable returns.

Given your proximity to retirement and your current focus on stocks, it might be worthwhile to evaluate your investment strategy. Ensuring your portfolio is diversified can help protect against significant downturns and provide stability as you transition into retirement.

Ultimately, ensuring your investment strategy aligns with your retirement goals and risk tolerance is crucial. A professional financial advisor can provide personalised advice that accounts for your entire financial picture, helping you make informed decisions that best suit your needs.

Luca,

The Money Coach, from the Money Coaching Hub

CEO and Founder of Monipal