Wild stock market swings in the wrong direction often lead to bad decisions on the part of investors. Here are three mistakes to avoid:
Sell All Your Stocks - Remember, it goes "Buy Low, Sell High". Investors that panic and sell all their stocks in a bear market do so at the worst possible time. Instead, review how much you have invested in stocks and evaluate your risk tolerance. If you consistently feel urges to sell, perhaps you are a more conservative investor than your portfolio indicates.
Splurge on "Hot" Stocks - Perhaps you see opportunities to invest in a bear market. Lower stock valuations do present good opportunities to be a buyer, but don't overdo it. Work with an advisor to setup a disciplined strategy, and stick to it. Reacting to the whims of the market to chase profit is a fool's game.
Purchase an Annuity - Annuity products that offer "gauranteed" income sound comforting, but they can actually be very harmful. Most annuity products are full of fees, fine print, and penalties. Who do you think comes out ahead, you or the companies that design these complex products in the first place?
Avoid the pitfalls, find a trusted advisor, set a disciplined strategy, and stick to it through thick and thin.