Americans suspend investments due to the war between Russia and Ukraine

The ongoing Russo-Ukrainian war is hurting Americans’ financial prospects, fueling a desire to save more and delay investment. survey from Mass Mutual. But financial experts say avoiding stock market volatility can be a mistake.

The report says that two-thirds of Americans fear conflict will hit their wallets, with nearly half looking to save more money and 42% putting off investing.

“In a year that began with such hope and optimism, many are extremely concerned about the state of the US economy,” said Amanda Wallace, head of insurance operations at MassMutual, pointing to stress over day-to-day expenses and financial insecurity.

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It has been a volatile period for the stock market as investors react to news of war, rising interest rates and soaring inflation, among other headlines.

According to certified financial planner Dennis Morton, founder and director of Morton Brown Family Wealth in Allentown, Pennsylvania, investment hesitancy is common, especially after a “liquidity event” such as a business sale. “Sometimes they say, ‘I’ll just wait until things settle down.’

But pausing investment during market turmoil can be costly, he said, because sitting on cash can mean missing out on opportunities to “make the money work” at lower prices, often missing out on a recovery.

In fact, high returns may follow some of the biggest declines, Bank of America research shows.

Since 1930, the absence of the top 10 profitable days of the S&P 500 index has contributed 28% of the total profit every decade. However, the company found that continuing to invest could result in a return of 17,715%.

These results are consistent with JP Morgan research showing how the best market days often follow the worst, and there is a possibility that failure to continue investing could cost.

Investing for retirement means a long-term strategy regardless of current market conditions.

Jim Shagavat

Affiliate Consultant at AdvicePeriod

“When we make a financial plan, we assume a certain rate of return over a certain period of time,” Morton said. “And skipping a few days or weeks or months can change that rate of return and really put the plan in jeopardy.”

Experts say that often a long-term perspective can help minimize anxiety or the desire for panic selling during stock market fluctuations.

“Whether the markets are up or down, my investment advice remains the same,” said Jim Shagavat, CFP and partner advisor at AdvicePeriod in Paramus, NJ. “Investing for retirement is a long-term strategy regardless of current market conditions.”

Even with good financial knowledge or skills, he says, it can be frustrating to see a significant decline in a portfolio. But it is very important to avoid emotional investment decisions.

“Let’s find that [asset] a distribution that you can stick to,” Morton added, explaining the importance of knowing your risk tolerance and developing an appropriate portfolio.

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