Password Managers

When the market drops, some investors lose perspective that downtrends and uptrends are part of the investing cycle. When stock prices break lower, it's a good time to review common terms that are used to describe the market's downward momentum.

Pullbacks

A pullback represents the mildest form of a selloff in the markets. You might hear an investor or trader refer to a dip of 5-10% after a peak as a “pullback.”¹

Corrections

The next degree in severity is a “correction.” If a market or markets retreat 10% to 20% after a peak, you’re in correction territory. At this point, you’re likely on guard for the next tier.²

Bear Market

In a Bear Market, the decline is 20% or more since the last peak.²

All of this is normal

“Pullbacks, corrections, and bear markets are a part of the investing cycle.”

When stock prices are trending lower, some investors can second-guess their risk tolerance. But periods of market volatility can be the worst times to consider portfolio decisions.

Pullbacks and corrections are relatively common and represent something that any investor may see from time to time in their financial life, often several times over the course of a decade. Bear markets are much rarer. In fact, between April 1947 and September 2021, there have only been 14 bear markets.³

A retirement strategy formed with a financial professional has market volatility factored in. As you continue your relationship with that professional, they will also be at your side to make any adjustments and help you make any necessary decisions along the way. Their goal is to help you pursue your goals.

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1. Investopedia.com, August 23, 2021
2. Forbes.com, September 20, 2021
3. Investopedia.com, October 29, 2021

I personally believe that one of the advantages of doing well financially is to be able to “give back” to causes that are near and dear to your heart. However, when we feel passionate about a cause, the emotional pull can tempt us to financially overextend ourselves. With some forethought, though, you can utilize creative measures that allow you to be generous without breaking the bank.

Your Time

Before you pull out your checkbook, perhaps consider getting your hands a little dirty. Whether it’s cleaning trash from the beach, working at a food pantry or assembling packages for our troops stationed far and wide, nonprofit organizations are powered by people. Even the simplest volunteer work can make a significant impact on an organization in need.

Your Talent

Some of us have specialized talents and skills that can be of value to a charitable organization. If you have an accounting background, perhaps you can offer your services to a nonprofit close to your heart. If you run a landscaping company, you can choose to donate your services to your alma mater. Such specialized services can be of great value to an organization and not make much of a dent in your personal finances.

Your Treasure

Just as there are different types of non-profit or charitable organizations, there are also different ways to financially contribute to them. Many of us are familiar with direct contributions, donations that may qualify to be deducted from your income tax. You could also contribute via donor-advised funds, which allows you to make charitable contributions to specially designated funds at a specific charity, receive a tax benefit from the contribution and recommend grants to be funded by the charitable fund account. Another option is to donate appreciated stock or appreciated real estate, which provides a significant tax deduction. Some choose to leave a charitable donation after they pass via a trust  These gifts in trust can be tricky, so it is advisable to meet with a professional to avoid any issues. Additionally, there are those who prefer to utilize charitable gift annuities, which allows an individual to receive a fixed income after donating money, securities or real estate.

There are as many worthy charitable organizations as there are stars in the sky. When your funds won’t allow you to do more, there are always other ways to “give”. Doing so thoughtfully and creatively can ensure that everyone benefits.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax advisor.

1. https://www.nptrust.org/what-is-a-donor-advised-fund