Here are sensible ways to plan for market corrections

Market corrections can be worrisome, especially for investors nearing retirement. Kevin E. Miller, CFP®, of Vanguard Personal Advisor Services®, suggests sensible ways to plan for these events and protect your portfolio.

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Amy Chain: Kevin, I’m going to toss a question your way. This one comes from Jan in Aurora, Illinois. Jan, thanks for your question. “For ones nearing retirement, how do investors protect their portfolio against a big market correction?”

Kevin Miller: Yes, it’s a theme that I hear a lot from clients that I talk to on a daily basis, and I think it’s really about having a plan ahead of time and then sticking to the plan and not letting the market really dictate what you’re doing from an investment standpoint. Because when you’re doing that and emotion starts to creep into the decision-making process, that’s when people tend to make more of the mistakes and that you make decisions that aren’t necessarily in your interest long term.

Amy Chain: Very good. Do you think that people should be asking themselves these questions before a market correction? I would imagine that we want to have a durable plan, right, not a plan that doesn’t hold up.

Kevin Miller: Absolutely, and that’s why we talk about having a written plan. Even if it’s something that simple, it doesn’t have to be really complex that dictates changes because as someone gets closer to retirement, generally you want to get more conservative. And having that mapped out ahead of time can be a huge thing because then it alleviates, I think, a lot of the anxiety because, again, you’re not dependent upon what the market is doing to make those changes.

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