| A correction could be coming. Here's how to protect your retirement portfolio from the dip | | |  | WED, JUN 23, 2021 | | | | Investors need to brace themselves for a "significant" market correction.
That was the message delivered by Moody's Analytics' chief economist Mark Zandi in a recent interview with CNBC. He warned there may be a 10% to 20% pullback in the markets prompted by the Federal Reserve's current policies.
Zandi also suggested the correction may already be underway because investors are starting to get spooked.
And, unlike the sharp drops over the past several years, Zandi believes a quick recovery will not happen, particularly because the market is richly valued. He estimates it may take time for stocks to make a full recovery.
CNBC's Lorie Konish reached out to several financial experts to get some advice on how investors can protect their retirement savings from any dip in the markets.
As you evaluate any investments in volatile times, these money experts say to prioritize your goals. Therefore, it's key to make sure to always consider how soon you will need the money.
For example, stock ownership should always be for a long-term hold, five-plus years, said one advisor. For any goals with a time horizon of five years or less, these experts say an investor should consider moving that money to stable value funds or fixed-income funds. Meanwhile, any short-term goals should be placed in safe investments, while funds for intermediate and long-term needs can gradually get more risky.
Experts also point out that when markets are down it can provide an opportunity to buy stocks because prices will be lower. Therefore, they urge investors to put more money in the market when things are declining because it can mean a greater upside when it recovers.
CNBC Financial Advisor Summit: The Innovative Advisor (June 29)
CNBC's Financial Advisor mid-year Summit will bring together forward-thinking advisors to hear from industry heavyweights about the state of the markets. Hear from Ariel Investments CIO Rupal Bhansali, Omega Advisors CEO Leon Cooperman, Morgan Stanley Vice Chairman of Wealth Management, Carla Harris, FCI CEO Brian Edelman and more. To register: www.cnbcevents.com/fasummit/.
(CFP CE credits available for attendees.)
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