Since the U.S. and Israel began strikes against Iran, oil prices have risen and stock markets have fallen amid uncertainty about the conflict and its economic effects. The Dow Jones Industrial Average is roughly 9% below its February high — a notable drop but short of the 20% decline usually labeled a bear market. Still, the pullback has reduced the value of many Americans’ investment accounts, from college savings to retirement funds.
What you should do depends largely on when you’ll need the money.
If you’re a decade or more from withdrawing: Do nothing
For most investors who won’t need their funds for 10+ years, advisers say the best move is to leave accounts alone. Markets have historically rebounded after global shocks, sometimes within months and often within a few years. Reacting emotionally to short-term declines — selling after a 4–5% drop, for example — can lock in losses and undermine long-term returns. For long-horizon investors, downturns can be opportunities to buy stocks at lower prices, though it can be hard to act when markets feel scary, cautions Steven Elwell, chief investment officer at Level Financial Advisors.
If you’re a few years from retirement or withdrawals: Shift toward safety
Investors nearing the time they’ll need cash should prepare by reducing portfolio risk. Diversification and a gradual move from stocks into more stable assets such as U.S. Treasury bonds help protect against the next event that could hit markets right when you must sell. Many people are in target-date retirement funds that automatically shift toward bonds as the target year approaches; 529 college plans often do the same as a child nears graduation. Expanding diversification to include international stocks and bonds can also spread risk and capture growth outside the U.S. International funds outperformed U.S. stocks last year in many cases, though they too can lag during specific geopolitical shocks. For long-term investors, buying a slice of the global market during a dip may be advantageous, says Michael Budzinski of Morningstar.
If you need the money now: Be methodical and unemotional
If you must withdraw funds amid a shaky market, there are steps to reduce damage. Favor selling from accounts or funds that have performed best — or at least lost less — and avoid selling the worst-performing holdings, since pulling money from those locks in larger losses and prevents potential recovery. Withdraw only what you truly need so the remainder of your investments can rebound. Kevin Khang of Vanguard advises against hasty moves; Christopher Holtby of Wealth Advisors Trust Company urges a rational approach — cutting expenses or delaying retirement if necessary — rather than joining a wave of sellers and realizing steep losses.
Bottom line
Your response should match your time horizon. Long-term investors are generally best served by staying the course or gradually adding to positions, those nearing withdrawals should rebalance toward safer assets and diversify, and people who must take money now should withdraw selectively and conserve as much of their invested principal as possible.