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What The Tariffs Mean For Your 401(k) | COFYT

9 months ago

What The Tariffs Mean For Your 401(k)

worx88

What The Tariffs Mean For Your 401(k)

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youtube.com

What The Tariffs Mean For Your 401(k)

Answer

Ask me anything about this video:

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The market was down 17.6% from its all-time high as of the day before the video's recording. It briefly dipped below 20% for a short time, entering bear market territory intraday.

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According to the data presented, bull markets typically last 4.3 years with an average cumulative total return of around 150%. Bear markets, on average, last a little over 11.1 months (less than a year) with an average cumulative loss of 31.7%. Note that slightly different figures (35% loss over 14 months) are mentioned later using a different data source.

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About this Video

Video Title: What The Tariffs Mean For Your 401(k)
Channel: The Money Guy Show
Speakers: Brian Preston, Bo Hansen
Duration: 00:58:27

Introduction

This video addresses viewer concerns about the impact of tariffs on their 401(k)s. The hosts offer context and advice to help viewers navigate the emotional aspects of market volatility and make informed financial decisions, emphasizing the importance of long-term planning over reactive, emotionally driven choices.

Key Takeaways

Market Volatility and Bare Markets: Bare markets are common and historically followed by strong recoveries. While the current market downturn is concerning, it's crucial to avoid emotional decisions based on short-term fluctuations.
Portfolio Structure: The impact of market volatility depends significantly on individual portfolio composition. A well-diversified portfolio aligned with one's risk tolerance and capacity is better equipped to weather market downturns.
Emotional Decision-Making: Financial media often exacerbates fear and uncertainty, leading to emotional decisions that can harm long-term financial success. Investors should focus on their long-term financial plan and avoid being swayed by short-term market anxieties.
Long-Term Perspective: Historical data consistently shows that long-term investors who remain calm and patient are ultimately rewarded. Short-term market fluctuations are less significant than long-term trends.
Importance of Planning: A well-structured financial plan should withstand market volatility. Regular reviews of asset allocation, risk tolerance, and financial goals are essential, particularly as retirement nears.

The hosts suggest viewers ask themselves:

Is this a seasonal or permanent change?
What can I control? What are the things I can actually impact?

The second question leads to further self-reflection on cash reserves, asset allocation, influences shaping their thinking (e.g., doomscrolling vs. recognizing market opportunities), and maintaining a long-term perspective.

The hosts advise the 28-year-old couple to first assess their financial situation. If they have followed the "financial order of operations" (saving appropriately, managing debt, etc.) and have the funds available for the vacation, they should proceed with their plans. The hosts emphasize that well-planned vacations shouldn't be sacrificed due to short-term market volatility, but they do suggest a double-check of their financial situation to ensure they're prepared for potential unforeseen events.