Recently, investment markets have been falling and the values are almost as bad as agricultural commodity prices. If you are trying to build up retirement savings to supplement your transition, don’t panic. This is all entirely normal.
Anybody in agriculture will tell you that production agriculture has always been a cyclical business. High prices spur more production. Increased supply forces prices down and around and around we go. Perhaps you are not surprised to hear that investing in commons stocks and bonds also has a cycle.
The month of January has seen lots of volatility. As I write this the markets are down between 8 and 10 percent depending in the index you follow. I see this sort of market correction as a natural part of the market cycle. Check out this video for a bit more on market cycles.
A 10% fall in markets is described as a market correction. Remember, market corrections are normal. The average annual market decline has been more than 14% each year since 1981 while the annualized return over that time has been more than 11%, according to Bloomberg.
Do you wonder if we should have seen this coming? Check out this video for a bit of perspective.
For those of us who cannot predict the markets, we need to plan for the unexpected and manage risk to meet your goals. I suggest you consult a fee-only fiduciary financial planner to help manage investment market volatility.
If this blog has you thinking about your own situation, get in touch with my office ([email protected]).
The opinions of the author are not necessarily those of Farm Futures or Penton Agriculture.