Inside CUA - The Catholic University of America Online Newspaper

July, 2019


Your TIAA-CREF Plan:
Tips for Dealing with Market Volatility

Submitted by Christine Sportes
Associate Vice President/Chief Human Resources Officer


During recent weeks we have seen dramatic changes in the financial markets particularly, steep drops in stock prices. These changes may cause you to question whether your investments will still meet your needs. TIAA-CREF has sent us the following considerations for dealing with market volatility:

1) Do you have the right financial plan and investment strategy?

  • Benefits of a financial plan. A well-thought-out financial plan and investment strategy can help to provide the confidence needed to cope with market volatility. A financial plan should provide a clear roadmap for achieving a range of goals from paying monthly rent or mortgage and saving for college, to investing for retirement. 
  • The right mix of investments. Your investment strategy should include an asset allocation  or mix of investments  that matches your financial goals and risk tolerance. To help manage risk, you should consider diversifying your portfolio with different types of investments, including stocks, bonds, and possibly other investments, such as real estate and guaranteed investments.
  • Benefits of an emergency fund. It's important to maintain an emergency fund in very safe investments, such as bank deposits or money market funds. Keeping funds on hand to meet near-term expenses could help you stay the course with riskier investments, such as stocks and bonds, over the long term.

2) Lessons from the bear market of 2008-2009.

  • What investors learned. Important lessons from the bear market of 2008-2009 can help investors cope with recurring bouts of market volatility: 1) Your asset allocation ¾ or mix of investments ¾ must match your tolerance for risk. 2) Selling in response to the market crash locked in losses, while staying the course helped investors recoup most of their losses over time. 3) Periodic market corrections have provided profitable buying opportunities.
  • Develop the right strategy and stick to it. Many investors who felt compelled to sell during the downturn discovered that their asset allocation was too aggressive for their risk tolerance. For a long-term investment strategy to work, you must be able to stick with it. If you feel that market volatility is jeopardizing your financial goals, it may be time to consider adjusting your investment mix for a better balance of risk and return.
  • Staying the course helped recoup losses after the last bear market. Investors who sold near the bottom of the 2008-2009 bear market locked in steep losses. The market plunged 43 percent from its peak in October 2007 to its trough in March 2009, based on the Russell 3000® Index2 a proxy for the U.S. stock market. Investors who stayed the course benefited from the market's strong rebound, recouping about 97 percent of their losses by April 2011.

3) Diversification can help protect your portfolio from market volatility.

  • Diversification defined. Diversification means owning different types of investments, rather than being concentrated in only one or two. Examples include U.S. and international stocks, bonds, real estate, and guaranteed investments. It also means owning different types of stocks, such as large, medium, and small companies, and various kinds of bonds, such as Treasury, corporate, asset-backed, and mortgage bonds.
  • Managing risk. Diversification can help manage risk because different types of investments tend to rise and fall at different times or to different degrees. Since it's impossible to predict which investments will perform better at different times, keeping a broad range in your portfolio can be beneficial. When stocks are going down, for example, bonds that produce steady income can help to reduce losses in your portfolio.

4) Market timing jumping in and out of the market can be a losing strategy.

  • Markets are unpredictable. It's important to have a long-term investment strategy that doesn't change with market movements for one reason: The market's ups and downs are impossible to predict. Studies show that trying to time the market ¾ by moving in and out of investments ¾ is a losing strategy over the long term.
  • Chasing performance. When investors try to time the market, they usually wind up chasing performance. They tend to buy after an investment has already gone up and tend to sell after the investment has gone down. The resulting pattern of buying high and selling low can destroy long-term performance.

5) Periodic rebalancing helps you to stick with your long-term investment strategy.

  • Rebalance periodically. Rebalancing your portfolio periodically can help to maintain the right proportions of different investments, correcting for market movements. Experts recommend rebalancing your portfolio when its composition no longer matches your long-term investment strategy. The goal is to restore the predetermined percentages for stocks, bonds, and other investments.

As we move into the fourth quarter of the 2011 tax year, this is a good time to revisit your TIAA-CREF plan contribution strategies for 2011. Have you maximized your pre-tax contribution opportunities this year? If you have questions regarding your current contribution level, you may contact the Office of Human Resources, 202-319-5590 or you may access related information on the TIAA-CREF website at


You can reach TIAA-CREF's telephone counseling center at 800-842-2776. If you are interested in meeting with a TIAA-CREF representative, go to


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Last Revised 29-Aug-11 01:23 PM.