What would a trade war mean for my retirement investments?

Things can seem more confusing in uncertain times.

  • By Paul Brandus,
  • MarketWatch
  • Investing Strategies
  • Saving for Retirement
  • Stocks
  • Investing Strategies
  • Saving for Retirement
  • Stocks
  • Investing Strategies
  • Saving for Retirement
  • Stocks
  • Facebook.
  • Twitter.
  • LinkedIn.
  • Google Plus
  • Print

Here at Retire Better HQ, we've gotten a fair amount of email on the return of stock market volatility. U.S. indexes peaked back in January and have gone on a roller-coaster ride since. Some of the recent volatility stems from President Donald Trump's announcement that he will hit China with trade tariffs, and Beijing's response that it may do the same to us. In other words, a trade war appears to be brewing.

This leads to a reader's question:

Q: I'm 62 and hoping to retire by age 67. I keep hearing how a trade war could hurt the U.S. economy, but what could it mean for an investment portfolio? And what, if anything, should I do?

"It's hard to say what stocks may do in a trade war," says Jeffrey Kleintop, chief global investment strategist and senior vice president for Charles Schwab. "The last trade war among major countries was 90 years ago. But it's probably safe to assume it wouldn't be good for stocks or bonds."

"However, rather than make any portfolio changes as if a trade war-driven bear market was imminent, a wiser strategy may be to simply rebalance your portfolio back to your long- term targets. In recent years, stocks have outperformed bonds by a wide margin. If you haven't rebalanced, the heightened volatility in your portfolio resulting from these trade spats can make you uncomfortable and feel as if you should make major changes or even sell everything."

"That means what you do next depends more on you, rather than the market or policy makers. If you've been underweight stocks and looking for a pullback, this is an opportunity. If you are overweight stocks, it isn't too late to sell even though stocks are off their highs and back to where they were late last year. Or, do nothing, and allow your long-term perspective and diversified asset allocation do what it is meant to do."

Kleintop's advice is on the mark. Stick to your long-term plan. Don't let emotions about current events derail it. Whatever your asset allocation — stocks, bonds, cash — make sure to rebalance on a regular basis. As usual, in uncertain times — and that's what we're in right now — it's important to keep a clear head — and talk things over with your adviser.

  • Facebook.
  • Twitter.
  • LinkedIn.
  • Google Plus
  • Print
Copyright © 2018 Dow Jones & Company, Inc. All Rights Reserved.
Votes are submitted voluntarily by individuals and reflect their own opinion of the article's helpfulness. A percentage value for helpfulness will display once a sufficient number of votes have been submitted.
close
Please enter a valid e-mail address
Please enter a valid e-mail address
Important legal information about the e-mail you will be sending. By using this service, you agree to input your real e-mail address and only send it to people you know. It is a violation of law in some jurisdictions to falsely identify yourself in an e-mail. All information you provide will be used by Fidelity solely for the purpose of sending the e-mail on your behalf.The subject line of the e-mail you send will be "Fidelity.com: "

Your e-mail has been sent.
close

Your e-mail has been sent.

You May Also Like...

Tax-smart ways to give to charities now

This infographic illustrates three tax-savvy approaches to maximize the impact of giving to the causes you care about most.

Behind the rising costs of long-term-care insurance

Long-term-care insurance was supposed to help seniors pay for costly nursing homes and personal aides. Now the industry is imploding. Here's what's at stake for more than 7 million Americans who own the policies.

Why retirees shouldn't let volatility scare them

What should retirees or soon-to-be retirees do during times of market volatility? Here's how to deal with an unpredictable market and the anxiety that comes with it.