Mo. Long-term investors, Ms. Smith says, will most likely need to do little if any recalibrating of their original plan. The plan, she says, should be based on long-terms goals, such as retirement and college education for children. Such investors, she says, still need to gun for growth over mere safety, which means buying stock funds more than bond funds. But investors at or near retirement may need to add some safety by buying bond funds or shifting some assets to money-market funds. Experienced investors also know funds that hold stocks paying dividends tend to hold up better than the average fund with nondividend-paying stocks.
Dividends provide a modicum of defense against market declines.
Factor in your time until retirement Time is perhaps your most important consideration, says DeKaser. Long-term investors need to wait out the correction. If you do, you will ensure an immediate loss. And you will forgo the opportunity of future price appreciation, as the market rebounds, he says. Or you can do nothing until we know that we have definitely landed at the market bottom.