Financial Education

Investors, Don't Let Panic Lead You Astray

There has been no shortage of things to spook investors recently: the U.S. budget deficit, continued high unemployment, the Greek debt crisis, the inability of Washington to resolve disagreements. High levels of volatility have given many investors the jitters. If you're wondering what to do, here are some tips for keeping your cool.

Keep your timeline in mind. If you're planning to spend the money you have invested 30 years from now, what does it really matter what the market does this week or this year? Your primary concern is how much money you'll have 30 years from now. On the other hand, if your investments are keeping you up at night, regardless of your timeline, you may need to take a more conservative approach. Just realize that you may give up potentially higher returns in exchange for greater peace of mind.

Consider setting up a systematic investing program (also called dollar-cost averaging).* You won't have to keep making investment decisions over and over. Just choose your amount, choose your investments, then forget about it for a while. Be sure to revisit your decisions periodically, though. In addition to being easier psychologically, this disciplined approach can help manage investment risk. By making regular purchases, you eliminate the risk of buying all your shares at the "wrong time." Instead, when share prices are high, you buy fewer shares, and when they're low, you buy more shares. You take advantage of market downturns because they allow you to accumulate more shares on which to enjoy any eventual increase in price.

Turn off the noise. If stock market news makes you nervous, avoid it. Turn off the TV, delete the app, turn the page in the newspaper – whatever it takes. You shouldn't ignore your investments altogether, but you don't need to track daily returns if you have a long-term timeline.

Maintain an emergency fund. Knowing that you have a cushion to fall back on can give you more confidence to invest appropriately for your long-term goals. Experts recommend keeping at least three to six months' worth of living expenses in an easily accessible, liquid account. During retirement, this account can be used to smooth out the ups and downs of income from your portfolio. At Chaco, we have an account especially designed for this reason. It’s called an Emergency Fund and it is set-up just like a regular savings account and you earn dividends. The Emergency Fund is designed to help encourage you to save, so you cannot make a withdrawal at an ATM or through online banking, you must stop by any one of our service centers and make a withdrawal in person.

Be sure you're properly insured. An insurance review can ensure you have the right kinds of coverage in adequate amounts. That way you won't risk having to tap investments prematurely to cover a disaster.

Stay the Course

Remember that selling when prices are down locks in your losses permanently. Historically, the markets have been cyclical, with downturns followed by upswings, so be prepared to ride out some ups and downs.**

* Dollar-cost averaging (systematic investing) cannot guarantee a profit or protect against loss in a declining market. You should consider your ability to continue investing during periods of low price levels.
** Past performance is no guarantee of future results.

Investment products:
Not federally insured
Not a deposit of this institution
May lose value

Our Difference is Simple

When it comes to your financial plan, we understand what you need now and more importantly, what you need tomorrow. We are here to help you get the most out of both. Whether just starting out or preparing to retire, we help you become financially prepared and fully informed. At Chaco, we bring you the same expertise and competitive services as other institutions, but with the compassion and genuine care that can only come from being member-owned and operated. From CDs and savings to mortgages and more, we work to keep things simple when it comes to your finances – so you can focus on your life. And that makes a difference.