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3 Tips to Navigate Market Volatility

By WTOP Staff

During the months of September and October, the stock market dealt investors more falling stocks than rising ones. Some may suggest the 2014 market has been worse than many years in recent memory. Although that remains to be seen, 2014 has been what I call a “year of fear.”

The year began with an extraordinarily cold winter, with places like Austin, Texas, getting snow and freezing rain, and the polar vortex crippling many parts of the Eastern Seaboard and the Midwest. Throughout the year, other events have affected stock market performance, including the Islamic State group, protests in Hong Kong, softening in German manufacturing figures, the spreading of the Ebola virus and the recent terrorist attack in Ottawa, Ontario. Because investors were inundated with so much information (and much of it was conflicting information), many investors did not know what to do, so they hit the panic button.

Although these events are undoubtedly reason to give us pause, if we look at the facts, we should be less concerned for our long-term investing success. Businesses have restructured and refocused on the bottom line, which often translates to better results for their shareholders. In addition, American energy production is at an all-time high, which has resulted in lower oil prices. While you are looking for positive signs in the stock market, here are three tips that may prevent your investments from getting hurt by recent fluctuations in the market.

1. Don’t be scared by market corrections. Market corrections are a necessary evil. Without them, we would create massive bubbles. These corrections typically help us keep our expectations realistic. However, it’s important to know the difference between a market correction and a bear market. I tell my clients that any softening of the market that is less than 10 percent is a correction.

When the market softens 20 percent or more, we are entering bear market territory, and it is likely time to make some changes to ensure they stay on course and reach their investment goals. We have to realize we have entered a new paradigm of investing — volatility is here to stay. Now that we know that, we have to figure out how to handle the volatility. Your portfolio should be diversified to protect against this volatility as much as possible.

2. Don’t let market lows give you portfolio woes. The market is a fickle beast. By its very definition, there will be both ups and downs in the market. However, two things are important to keep in mind should either market movement occur. First, you have to remember your plan and time horizon. You developed your investment plan when cooler heads prevailed, which is the best time to create it. Next, you have to realize that since fear is an inherent part of investing your hard-earned money in the stock market, the second thing you should do is take a risk tolerance questionnaire when the market falls.

These questionnaires are available on any number of websites, and they can help you put the market in context. Have you taken on more risk than you are comfortable with? If you get out of the market when it softens (and take the financial losses associated with it), by the time you decide the waters are safe enough to get back in, it may be too late.

3. Beta-test your portfolio to minimize your fears. Beta is a measure of a fund’s sensitivity to market movements, and is calculated by comparative analysis of how your portfolio will perform with respect to the Standard & Poor’s 500 index. Performing this kind of analysis can help to take some of the fear out of investing in the stock market. However, a low beta does not necessarily mean that low levels of volatility exist. It only suggests the market-related risk is relatively low.

For example, an investment in gold will often have a low beta, but despite the fluctuations that can happen in gold prices, the beta will remain low. However, beta can help you determine how much risk there is in your portfolio, and if that lines up with the level of risk you can tolerate.

Jacob Gold, Voya retirement coach, is a third generation financial advisor with Voya Financial Advisors Inc., a broker-dealer of Voya Financial. He is the author of “Financial Intelligence; Getting Back to Basics after an Economic Meltdown,” which was published in August 2009. Gold is a certified financial planner practitioner and Series 7, 24 and 66 securities registered.

Securities and Investment advisory services offered through Voya Financial Advisors, Inc., (member SIPC).

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3 Tips to Navigate Market Volatility originally appeared on usnews.com

Don’t Settle for Student Loans to Pay for Online Education

By WTOP Staff
Online college programs are becoming a more popular choice for prospective students, with one study finding that more than 6 million students enrolled in at least one online course in fall 2015. The popularity of these courses can be attributed in part to their flexibility with working adults' schedules, students' ability to progress more quickly through online programs and, oftentimes, cheaper tuition. [See 10 low-cost online bachelor's programs for out-of-state students.]Online degrees can be beneficial to many college students, but some studies have shown online learners complete their programs at lower rates than students at traditional brick-and-mortar campuses. Individuals with student loans but no degree comprise two-thirds of defaulted borrowers. Though these numbers are not encouraging, just like for traditional programs, there are ways to reduce how much you'll need to borrow for an online program to ensure you won't become one of these statistics. Don't just settle on borrowing student loans to cover the whole cost of your program and living expenses. Instead, start thinking about how to cut costs and cover your balance in different ways, such as the following. -- Grants and scholarships: Even though you are taking an online course, you can still apply and receive grants and scholarships. But your first step should be to complete the Free Application for Federal Student Aid, commonly referred to as the FAFSA, which will allow you to receive a Pell Grant if your expected family contribution is low enough. The EFC criteria and award amounts are adjusted annually, but the 2017-2018 academic year awards range from $606 to $5,920, which could significantly lower the amount you borrow annually. Your next step is to apply for scholarships. You can start by checking online scholarship search engines, such as the Salt Scholarship Search, College Board's BigFuture and Peterson's. But don't forget to take advantage of local organizations and your school's financial aid office. Both may offer scholarships that you can't find with a national scholarship search. [Review these 10 sites to kick off your scholarship search.]For instance, organizations like the Elks Club, Knights of Columbus or the Rotary Club typically offer scholarships annually to local students. Just because you're going to school online doesn't mean you're ineligible. Visit your local library for scholarship listings, and ask around town. You might be surprised how many local organizations offer scholarships. While these scholarships typically aren't large, every little bit counts. Each dollar you receive in a scholarship is a dollar you don't have to borrow and pay interest on. -- Work-study: Another option for online students may be work-study awards. Not all students enrolled in online programs are eligible, but students at some schools -- including, for example, SUNY Empire State College and Liberty University -- are. Work-study awards are not given upfront like scholarships and grants. In most cases, they are an offer to earn up to the awarded amount if you secure an eligible work-study job. While there is a misconception that all work-study jobs must be on campus, students can work for off-campus, nonprofit or public employers as long as the work is in the public's interest. You may be able to work for a for-profit employer if the job is relevant to your course of study. No matter who the outside employer is, it will need to have an established agreement with your college for you to receive work-study funds. Remember, to be eligible for federal financial aid, you must be enrolled and pursuing a degree or certificate. If you're not working toward a credential, Pell Grants and work-study won't be option, but you may still be able to take advantage of private scholarships -- just be sure to read the eligibility criteria carefully. [Explore what to know about financial aid in online programs.]-- Pay as you go: One of the great benefits to enrolling online is the flexible schedule, which can allow you to complete your college coursework around your responsibilities. But prospective students often overlook using their part- or full-time job earnings as an option for paying for college. Almost 80 percent of college students in 2015 worked at least part time while attending classes, according to the National Center for Education Statistics. By budgeting and thinking strategically about your college costs, you can likely reduce your dependence on student loans by paying a portion out of pocket. Many -- but not all -- online programs are less expensive than traditional programs and often have shorter payment periods. Six, eight or 10 weeks are common course durations. Because of the frequency of payments in an online setting, you may be well-placed to pay as you go and possibly avoid borrowing altogether. Attending college online and avoiding student loans may be challenging, but if you are willing to put in the effort, you can limit the amount you need to borrow. More from U.S. News Q&A: Understanding Student Loan Discharge Eligibility Student Loan Refinancing Isn't Right for All Borrowers
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