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Is the stock market today too risky?

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Thrivent’s chief investment strategist weighs in on retirement money myth.

Sometimes when people see the stock market fluctuate like it did in 2020, or they think back to the stock market crash decades ago or the smaller crash in 2008, it causes some uncertainty. And they may believe the stock market is too risky.

It’s riskier, frankly, to not be investing money in the market, says Mark Simenstad, chief investment strategist at Thrivent Funds.

“The mix of your portfolio should take your age into account, but the stock market should be part of any well-diversified portfolio,” Simenstad says.

It’s really not about whether the stock market is too risky. It’s about how your investment risks are being managed according to your retirement goals.

“You need to take a bigger view of the market,” Simenstad says. “For example, if you take a 10-year view of the market, there have only been a few periods that if you held steady for 10 years you didn’t make money.” Working with a financial professional can help you align your long-term goals with the right investment tools.

It’s also about riding out volatility, says Patrick Egan, director, Sales Strategy, at Thrivent. “The longer you stay invested, the impact from the volatility is lessened.”

Plus, Egan asks, where else would you put your money right now? Certificates of deposit and money market accounts don’t offer much benefit in a low interest rate environment, he says.

“We’re at historically low interest rates,” Egan says. “If you save for retirement in these accounts, it's unlikely you could save enough with the yield you would be getting. Sure, you’d still be saving money, but after modest inflation like we’ve had, you’d have a negative real return. You’d lose spending power.”

All financial decisions come with some level of risk; the stock market is no exception. It’s important to understand your own risk tolerance and your goals while working with a Thrivent financial advisor to create a strategy that allows you to invest confidently

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CDs offer a fixed rate of return. The value of a CD is guaranteed up to $250,000 per depositor, per insured institution, by the Federal Deposit Insurance Corp. (FDIC). An investment in a money market fund is not insured or guaranteed by the FDIC or any other government agency. A money market fund seeks to maintain the value of $1.00 per share although you could lose money. The FDIC is an independent agency of the U.S. government that protects the funds depositors place in banks and savings associations. FDIC insurance is backed by the full faith and credit of the United States government.

Past performance is not necessarily indicative of future results.

Concepts presented are intended for educational purposes. This information should not be considered investment advice or a recommendation of any particular security, strategy or product.