Singletary: Advice for 2023 investing at different stages of life

Just after Thanksgiving, I began checking my 401(k) account. It was still down from a year ago, but things were improving.

My optimism came too soon, with irritability and dizziness returning as my retirement balance jumped and then dived.

As it did all last year, the stock market is making me seasick.

Better-than-expected developments on inflation in the middle of December helped stocks move higher for a while. The Federal Reserve, as expected, raised its benchmark interest rate, adding that rate hikes to fight inflation would continue in 2023.

Then softer-than-expected retail sales in November and weakening manufacturing and services activity depressed investor confidence, sending the stock market down again.

"Stocks may still have more recalibrating to do over the near term, which could keep volatility elevated at the start of 2023," Ameriprise Financial chief market strategist Anthony Saglimbene wrote in his last market perspectives report for 2022.

I routinely check in with a group of financial experts to help you — and me — put things in perspective for the long term. I circled back and revisited what they said at the beginning of the year as the stock market delivered some deep drops. Their advice hasn't changed.

You're a young investor

Time is on your side. "If you're far off from retirement, then don't worry about it," said Dan Egan, managing director of behavioral finance and investing for Betterment, a digital investment advisory firm. "Focus on what can help you save more effectively, and keep plugging money into tax-advantaged accounts or a 401(k) match account."

Keep dollar-cost averaging into the market, recommended Ernest Burley, a certified financial planner and owner of Maryland-based Burley Insurance and Financial Services.

With dollar-cost averaging, you invest a fixed dollar amount on a regular basis, regardless of the price of the investment. When the market is down and you continue to invest, you buy in at lower prices.

"Don't let short-term volatility sidetrack your goal and strategy to achieve long-term gains," Burley said.

Now is the time to add to your retirement account, even if the market is down, McClanahan said.

But to avoid the temptation to tap that money, make sure you have a savings fund for emergencies, as well as home and car purchases, she said.

You've got 15 or more years until you retire

Stop watching the daily gyrations of the markets, which will only add to your anxiety.

As with actual seasickness, Egan said, "find a more stable fixed point and pay attention to that."

"The market will eventually rebound, and you want to be on the train, not the platform, when it leaves the station," McBride said. "A broad stock market index fund is the way to go, because it minimizes your costs, and most investors fail to beat the market anyway."

Lean into areas that reduce your portfolio risk, Saglimbene said, including high-quality stocks and bonds, as well as income-producing investments.

And McClanahan said that "the key with successful investing is to know how much risk you can afford to take and make a commitment to keep the assets that you don't need for a long time invested in the stock market through thick and thin."

You're a few years from retiring

If you're worried about having enough income when you retire, consider pushing back your retirement date if possible.

Egan pointed out that working longer has a threefold benefit. You get more savings. You have fewer years you need to cover. Your portfolio has time to recover.

Now is the time to build an emergency fund so that if you retire and the stock market plunges, you can tap that cash until things stabilize.

"If you are getting close to cutting back at work, you should be less aggressively invested," McClanahan said. "Make sure you understand how much you need in savings to be able to quit work."

You're retired

You should review specific holdings in your investment portfolios.

In the case of using the bucket approach, "a short-term bucket of cash and high-quality fixed income can help you meet daily living expenses when markets are declining, while your longer-term bucket can remain invested through both up and down markets," he said.

Whatever moves you make, take time to consider the consequences.