The rollercoaster ride continues on Wall Street, with swings up and down over the past few days. So what does this mean for you?
ABC15 spoke with financial psychologist Dr. Dan Pallesen of Keystone Wealth Partners.
He says when the stock market tumbles, most will see the biggest impact on their 401k retirement plan. He says you may see the value starting to drop, which can be scary, and some may want to move their investments into cash within their account. But Pallesen says that is actually the worst thing you can do.
“What happens, inevitably, is the stock market rebounds. Prices go back up,” Pallesen said. “So, if they drop and you sold and they go back up, you don’t get to experience the gain. So, it’s important to stay disciplined and have a long-term view when you’re investing in your 401k.”
Pallesen recommends knowing which part of your account is geared for growth and which part is geared for safety, so when something like this happens, you have enough safety in your portfolio.
The uncertainty on Wall Street comes as the Federal Reserve announced it is expected to raise interest rates for the first time in three years. It’s a move to help stop inflation and soaring prices of just about everything. The Consumer Price Index in December rose 7%, the highest since 1982.
In return, rising interest rates will impact mortgage rates, car loans and credit card debt.