Finding calm on volatile news days

Q. I try not to look at my investments but it’s impossible to not hear radio reports on the stock market. etc. What can I do to not pay attention? I get very nervous when I hear about a bad day.
— Trying

A. Market volatility is never easy to deal with — especially when you are watching your portfolio’s value decline.

Most media, as you probably know, rely on stories of fear and greed in order to attract viewers, said Taylor Thomas, a certified financial planner with Round Table Wealth Management in Westfield.

He recommends — and really, we didn’t say this — to balance out your media intake with articles like those found here on NJMoneyHelp.com, “which should provide you with a more realistic perspective than is offered by the standard financial market media.”

Next, he urges you to I urge you to come up with a retirement plan that includes an asset allocation for your portfolio.

Thomas said you may need some professional help to accomplish this task. The plan should take into account your retirement and lifestyle goals, retirement income, assets, cash flow and liabilities.

“Through this process you — with the help of a financial advisor — will be able to figure out what portfolio return amount is required in order to achieve your retirement and lifestyle goals,” he said. “Once you know the return required, you can begin to select a portfolio to achieve this goal.”

Thomas offered this example.

Say you will need to achieve a long-term return on your portfolio of 7 percent per year in order to meet your goals.

“You should look to create a portfolio of stocks, bonds and possibly some alternative assets like REITs (Real Estate Investment Trusts) and MLPs (Master Limited Partnerships) whose combined return should provide you with a long-term rate of return of close to 7 percent,” he said.

He said completing your financial plan and correctly allocating your investment assets should hopefully provide you with the fortitude to remain confident in your plan and portfolio during times of volatility.

But that doesn’t mean you can “set it and forget it” because there may be opportunities for tactical asset allocation shifts, such as moving funds into or out of the stock, bond or alternative portions of your portfolio. But at least, Thomas said, you will have confidence that your portfolio is correctly allocated to achieve your target return.

“When the markets get volatile, lean on the plan you have set in place and stick with it,” he said.

Email your questions to ask@njmoneyhelp.com.

Karin Price Mueller writes the Bamboozled column for The Star-Ledger and she’s the founder of NJMoneyHelp.com. Click here to sign up for the NJMoneyHelp.com weekly e-newsletter. Like NJMoneyHelp.com on Facebook and follow it on Twitter.