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The war with Iran has rattled markets and the investment accounts of many Americans. The Dow Jones Industrial Average is down about 8% since its February high, which it hit about two weeks before the war began. NPR personal finance reporter Stephan Bisaha asked some financial advisers what to do when markets are shaky.
STEPHAN BISAHA, BYLINE: Now, a drop of this size is not a crash or even a bear market. That means 20% down from recent highs. But markets are down since the war with Iran began. And what advisers say you should do depends on when you need to tap into your investments. For most people, say, 10 or more years away from that moment, the advice is simple - leave your retirement accounts alone.
STEVEN ELWELL: You really don't want to shoot yourself in the foot, having a rash reaction to stock prices going down 4 or 5% in a week and a half.
BISAHA: Steven Elwell with Level Financial Advisors says you don't want to sell when the markets are down and are likely to recover pretty quickly, based on other recent global disruption, like Russia invading Ukraine and Liberation Day tariffs. The markets got a shock before recovering. And often, six months later, they were doing even better.
ELWELL: Either the conflict will resolve or markets move on to something that has a greater impact on the bottom line, which is always corporate earnings.
BISAHA: And if you are decades away from retirement, Elwell says this is actually a good time to buy stocks 'cause they're essentially discounted.
ELWELL: We like to buy everything else on sale. So if you're - have that long time frame and stock prices are down a little bit, that's a good thing for you if you're about to invest.
BISAHA: But what if you are a few years away from retirement? Christopher Holtby is the co-founder of Wealth Advisors Trust Company. He says that by the time you get that golden watch, your account will probably have recovered from this conflict, but you need to be prepared for the next one.
CHRISTOPHER HOLTBY: Anyone who's, like, three to seven years entering into retirement should be thinking about what happens if a really bad event, like bombing Iran, happens.
BISAHA: He says the advice is to diversify. It helps to shift some investments out of the high-reward, highly fickle stock market into more stable assets like some bonds. Many retirement funds do this automatically. That's called a target date fund. As you get closer to retirement, it shifts some of your holdings from stocks to bonds. That's also true for funds in college investment plans, like 529s. Many start switching to bonds as high school graduation gets closer. This all cuts down on your risk.
HOLTBY: People should keep in mind that they want to shrink that uncertainty as they get closer to reaching their wealth goals.
BISAHA: Another way to diversify is to make sure you're not just invested in American stocks and bonds, but also looking at international markets too. But what if you are not five years from retirement but five days and have not done that prep?
HOLTBY: Anyone who hasn't planned for potential bad news and has invested as though everything's always going to go well, that's the scariest thing.
BISAHA: There are still some options, like if you have two different funds - one not doing so hot, the other doing even worse - draw from the one that's doing relatively better. You are still selling at a loss, but it is a smaller loss. And most of all, Holtby says, you only want to draw what you need. Do not panic and sell it all. Leave as much of your investment untouched as you can, so it has a chance to recover. Stephan Bisaha, NPR News.
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