Suze Orman had some strong words for a listener who was considering drastically changing her IRA’s investment strategy. On a recent episode of the Women & Money podcast, a listener named Jane shared her concerns about the current state of the market and asked Orman if it would be smart to sell all of her current IRA investments.
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Jane said the idea behind this would be to place the proceeds into a money market fund within the IRA, and then average dollar costs back into the market over time, assuming prices might drop soon.
Orman responded immediately: “It’s the worst idea I’ve ever heard in my life.”
“Jane, don’t do it,” KT, Orman’s wife and co-host, echoed Orman’s sentiments. They quickly explained why they advised against this strategy.
The biggest flaw in Jane’s idea, according to Orman, was her assumption that the market would fall. No one can predict this with certainty. “You don’t know they’re going to come down,” Orman said. “They can keep going up and up and there you are sitting on the sidelines waiting for them to come down.”
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By selling all her assets within the IRA, Jane would essentially be trying to time the market. Orman says this poses significant risk because there is no guarantee the market will fall and Jane could miss out on potential profits while waiting for a dip that may never happen. Orman emphasized that staying invested offers continued growth opportunities, even during uncertain market conditions.
Orman suggested that Jane focus on a more traditional approach by keeping her current investments while adding new money to her IRA. She recommended that Jane apply dollar-cost averaging to her contributions, which means investing fixed amounts on a regular basis regardless of market conditions. Many investment experts argue that this approach can help reduce the impact of volatility over time and that there is no need to anticipate market highs or lows.
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For Orman, dollar-cost averaging offers a balanced path forward, avoiding large, potentially risky moves to offset market declines. Orman believes in a disciplined, consistent investment strategy that capitalizes on long-term growth and minimizes emotional reactions to fluctuations.
Timing the markets can be risky and Orman has maintained this stance. Financial experts often warn against this strategy, as it is notoriously difficult to predict movements accurately. Selling and reinvesting at the wrong times can lead to significant losses, missed profits and increased fear of market changes.
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In Jane’s case, even if her strategy resulted in a successful return at lower prices, this would entail a high level of risk and vigilance, something that Orman suggests could undermine her financial stability.
Orman’s advice focuses on a stable, long-term approach to investing. For those in similar situations with retirement accounts such as IRAs, Orman emphasizes sticking to a consistent investment strategy and avoiding drastic changes based on predictions of what the market will do. power Doing.
If you’re looking to improve or change your investment strategy, consider speaking to a trusted financial advisor. They can help you navigate the nuances of complex strategies and develop a plan specifically tailored to your unique financial goals.
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This article ‘The Worst Idea I Ever Heard in My Life,’ Suze Orman Responds to Listener on Selling Everything Inside IRA and Reinvesting It originally appeared on Benzinga.com
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