Sixty-seven percent of registered financial services agents in a recent poll reported that their clients have pulled their investments out of the stock market. A nationwide survey of nearly 1,000 Farmers Financial Solutions registered agents also found that small middle-class investors have been left with depleted savings and an all-around uncertainty about where to turn for help after months of turmoil on Wall Street.
"The turbulent market and economic uncertainty has created anxiety among investors, leading many to liquidate their investments in fear of losing more," says Brian S. Cohen, president of Farmers Financial Solutions. "It is an understandable psychological reaction, but a dangerous strategy for retirement planning. People need to focus on the long term and realize there are basic steps that can help build a secure investment strategy-even in the worst bear markets."
Cohen recommends that every investor remember these five investment facts when establishing an investment strategy:
Everyone can save-Regardless of income, everyone needs to put money away regularly for the future. Even if it is a small amount, something is better than nothing, and it will accumulate over time.
Know your needs-Realize that you have both short-term and long-term financial needs. Develop a savings strategy for now and the future that is appropriate for your income level and risk tolerance.
Don't "play" the market- Historically, the stock market works in cycles and smart investors will use a consistent, long-term strategy for accumulating savings and investments. It is dangerous to play the guessing game of selling high and buying low.
401(k), IRA ASAP-Continue investing in a 401(k) and start an IRA. While this seems like old advice, the contribution and tax benefits of these options are significant and it is a mistake to neglect them.
Diversify, diversify, diversify-Pursue a balanced investment strategy using a combination of mutual funds, income-oriented products, life insurance and other savings options. Don't get burned by putting all your eggs in one basket.
Through more than 5,000 registered agents in 29 states, Farmers Financial Solutions, LLC-a member of the Farmers Insurance Group of Companies-is a leading provider of financial services to middle-income America. For more information on planning for your financial future, visit www.farmers.com or contact your local Farmers registered agent.
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