Issue link: https://viewer.e-digitaledition.com/i/1001000
AACREDITUNION.ORG | 9 Now that you're set to smooth volatility, review your portfolio regularly. Once a year or so, check that the asset allocation you chose is being maintained. Rebalance it if a market move has caused your preset percentages to vary much. If all this sounds like too much, consider an all- in-one target date fund. Look for one match- ing your risk tolerance and the year you plan to retire or buy that second home or otherwise begin spending down your investments. Target date funds adjust the mix of stocks and bonds to be more conservative as you approach the target date. They automatically rebalance to refl ect the effects of any swoops in the market. Perhaps the best move during volatile markets is to focus on your fi nancial needs. If you're planning for the future, riding out a valley is a smart plan. Brace yourself for the bumps in the road and know that the market will always have peaks and valleys. American Airlines Credit Union Flagship Financial Group professional advi- sors can help with fi nancial planning and setting up the right portfolio to work for you. Find out more information, see Page 43 or call (800) 533-0035, Ext. 4699. infl ation and interest rates is causing many cur- rent forecasts to call for higher volatility in the next year or two. Numerous studies show that investors who sell when markets are down fi nd it diffi cult to make up the loss. Markets often bounce back quickly, and if you're out of the market when that hap- pens, you miss the chance to regain lost ground. As a rule, experts advise staying the course in volatile markets. To make staying the course easier, plan now for future volatility. Start by asking yourself a few questions: Why am I investing? What is the goal of my investment program? How long do I plan to invest? Also, how would I feel if my portfolio lost 10 percent (or 20 percent) in a short time? Use answers to allocate your portfolio between equities (stocks) and fi xed-income (bonds.) If volatility makes you queasy, you may want most assets in fi xed-income investments, which tend to be less volatile. Same if you plan to retire or tap investments soon. A more risk-tolerant investor with a longer timeframe might tilt more toward equities. Next, diversify. A well-diversifi ed portfolio has a variety of stocks in the equities portion and a variety of bonds in the fi xed-income portion. The idea is that when some holdings are down, others will be up, smoothing out volatility.