President Donald Trump’s first 100 days in office have shaken the stock market. The S&P 500 index dropped about 8% during this time. This was the index’s worst showing for a new president since Gerald Ford in 1974.
The situation could have been worse. The index fell close to 20% from its highs in late February. Trump’s broad tariffs surprised the market.
Things started to recover after he paused the tariffs for 90 days. The chances of a recession have gone up. Trump’s tariff situation is not over yet.
If you are worried about your IRA savings, there is important advice to think about. It is easy to invest when the market is going up. But times of trouble test true investors.
As Trump tries to change global trade, investors are unsure. It makes sense that some may be panicking. But history shows we have faced big uncertainties before.
Times like the Great Recession in 2008 or the COVID-19 pandemic seemed impossible at first. Many feared the market would never recover. But the market has always found its footing.
trump’s tariffs shake investor confidence
Data shows that long-term investors who stay in the market do not lose money. The U.S. stock market has never had negative returns over any 20-year period from 1936 to 2024.
In the past 20 years up to 2024, the market dropped an average of almost 15% each year. But it had positive returns in 75% of those years. Every investor is in a different situation.
Younger investors can often afford to be more aggressive or wait things out. Those closer to retirement may need to protect their portfolio’s current value. If you cannot wait and want to protect your investments, diversifying may be wise.
This could mean investing in gold, short-term Treasury bonds, or certificates of deposit. Speaking to a financial advisor about your situation is always a good idea. But data shows that if you can wait many years, your investments are likely to be safe and potentially grow in value.
Based on 100 years of data, short-term trading is a bad strategy. Investors would have lost money 40% of the time after adjusting for inflation if they only invested for a month. The longer you hold investments, the less likely you are to lose money.
Over a five-year period, the chance of losing money is nearly cut in half. And over 10 years, the chances are only 13%. In times like these, keeping a long-term view can be key to protecting and growing your retirement savings.
Staying calm and invested, diversifying if needed, and talking to an advisor can help navigate this uncertain period.
Photo by; Nicholas Cappello on Unsplash