How Can I Stop My IRA From Losing Money?

An Individual Retirement Account, or IRA, is designed to meet almost every financial goal and risk profile. When you reach age 59 1/2, withdrawals without penalty are possible.

Your IRA may experience losses at times during the year. But remember that, over the long haul, investments typically increase in value.

Diversify Your Investments

Diversification doesn’t eliminate investment risk, but it can reduce large losses. If all your funds are invested in one company’s stock and it unexpectedly declines in price, a significant portion – or all – could disappear instantly. Ditto for bonds where interest rate changes send bond prices plunging.

Financial experts advise diversifying among different asset classes. Within stocks, this can include diversifying by size (small-, mid- and large-cap stocks), industry and sector – even geographically since businesses in different countries experience different economic trends.

Diversifying your investments offers several options, from mutual and exchange-traded funds that provide exposure to multiple stocks or bonds, to nontraditional assets like real estate or commodities and tax-deferred strategies like CD ladders.

Use Stop-Loss Orders

Stop-loss orders can help protect gains or at least reduce losses by helping you sell stocks when prices decline, thus protecting gains or at least mitigating losses. They also allow you to make decisions based on logic rather than emotion – something essential for successful investing.

Finding an optimal place for placing stops can be challenging as price volatility varies by market and stock. Some investors use percentages while others utilize support or moving averages as ways to set risk thresholds and determine how far from current prices they want their losses to stop at.

If your IRA investments aren’t prepared to withstand another market crash, consider diversifying with safer assets like bonds and cash instead. Your goal should be less about maximising growth than protecting retirement funds.

Move Your Funds into Safer Investments

An Individual Retirement Account, or IRA, allows people to invest their savings in various securities such as stocks, bonds, mutual funds and exchange-traded funds. When these securities fluctuate in value over time, your IRA’s overall balance can shift accordingly – though rebalancing may help to mitigate losses by stabilizing your portfolio and mitigating potential impact from losses.

Target-date funds may help. These mutual funds are designed to work toward your retirement year and rebalance their risk levels accordingly over time. You could also use index funds or ETFs as diversifying tools that limit market fluctuations; whatever method of investing you choose, make sure the safe investments in your IRA cover your living expenses; otherwise it will be difficult for you to reach your retirement goals without taking on additional risk.

Don’t Lock in Losses

If your retirement accounts are losing money, take a step back and consider why that is. One likely explanation could be that they’re not as diversified as they should be: your savings should be spread among different asset classes, economic sectors and geographical regions to reduce any one area from being offset by losses elsewhere.

Your diversified portfolio should include an appropriate portion of bonds or cash to help cushion any market swings that arise.

Be mindful that any loss incurred within an IRA or similar tax-advantaged account will only become taxable if you cash out the entire account; otherwise it can be deducted on your taxes as miscellaneous itemized deduction (but only if you itemize). This would reduce overall taxes liability while giving your investment more of a boost – however it would be wiser not to tap your IRA to cover short-term losses.

Raymond Banks Administrator
Raymond Banks is a published author in the commodity world. He has written extensively about gold and silver investments, and his work has been featured in some of the most respected financial journals in the industry. Raymond\\\'s expertise in the commodities market is highly sought-after, and he regularly delivers presentations on behalf of various investment firms. He is also a regular guest on financial news programmes, where he offers his expert insights into the latest commodity trends.

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