Published on May 2nd, 2018 | by David Morales0
Financial Report: Another Dow drop
Recently the Dow Jones Industrial Average suffered two daily drops of more than 1,000 points. A new study from COUNTRY Financial Security Index reveals that about 52 percent of Americans feel financially prepared should it happen again. However, only 28 percent of people have a financial plan in place.
Because of this volatility, Sixty-five percent of millennials do not consider themselves financially prepared for another down market in comparison to 70 percent of older Americans who believe they are equipped to handle a drop.
Americans are unsure how the market will affect their retirement savings. The study found that 61 percent of Americans are not sure of how long their retirement might be delayed should a large 6,000-point drop in the Dow occur. That is why The Hype magazine finds it important to talk about financial literacy and the simple steps Americans can take to better manage their savings, such as making a financial plan. We share helpful tips for diversifying assets, preparing for retirement and developing long-term financial strategies in a volatile market.
Tell us about Money Smart Week, and some financial literacy tips our viewers can use?
Money smart week is part of Financial Literacy Month. Money Smart Week is April 21 the 28 and it’s really all about financial education for the American people. Just helping them get some basic money, financial tips. In light of recent market volatility, may be even more important than normal. Our reason for being out is just to help educate people on those issues. This market volatility reminds me of the Michael Tyson quote, “everyone has a plan until they get punched in the face,” and American people are feeling a little bit like they’re getting punched in the face with this market volatility.
Country Financial did a survey of the American people asking them how prepared they were for a market drop of 6,000 points on the Dow and about half said that they were prepared and yet when we looked at the survey data it showed only about a quarter of them had a financial plan. So, we would just suggest that there’s probably some work to be done in getting really prepared for market volatility.
What are some simple steps Americans can take to better manage their savings and make a financial plan?
I think the biggest thing is not to be overwhelmed. It’s relatively straightforward, it’s not complex doesn’t make it easy but the simple step is start with a budget. Do you have a budget? Do you know what your expenses are? Where your money is going? I think if you do that if you track your expenses people will find dollar savings, which leads to the second point is have an emergency fund. Have that emergency fund so that you can fund that unexpected medical expense or the car repair whatever it may be and that you don’t dig into your retirement savings to fund whatever that emergency is and derail your plan. Third just get started! Just start with something.
What are some helpful tips for diversifying assets, preparing for retirement and developing longer-term financial strategies despite market volatility?
Of course, that is dependent on where you are in your retirement journey. If you are you know five years out from retirement and you’ve saved your nest egg, you have different risk issues to worry through and think about then the s25-year-old millennial that is just getting started. So, if you’re close to retirement, you’re probably going to be a little bit more conservative to protect that nest egg.
On the other hand that young person should take on a little bit more risk they should take on more equities they have a whole lifetime ahead of them to invest and save and they can write out various market fluctuations through the course of their lifetime and yet what we find is many times that young person because their nest egg is so small, they tend to be more conservative because they don’t want to lose what little they have. The reality is that’s not really the issue it’s the it’s the compounding that grow be in the market and just need to encourage them to do that.
Where can we go to learn more information?
I encourage you to go to our website at countryfinancial.com.