Investing Worries? Avoid Panic Selling and Keep a Long-Term Perspective

admin • May 15, 2023

Investing is a key strategy when it comes to building wealth over the long term. But as important as it is, a lot of people find it intimidating. Investing isn’t risk-free, which can often create worries for our clients—especially during an economic downturn.

If you keep a close eye on your individual investment accounts, you know why. During economic downturns, you might see the value of your portfolio plummet. And it can be terrifying. 

When this happens, many people have the urge to make an emotional—not logical—decision and sell their investments. But this is a big mistake.

If you’re tempted to abandon your investments as soon as the economy starts to look dicey, pause and take a deep breath. Below we’ll show you why panic selling is a bad idea—and how approaching your investments with a long-term, level-headed approach can help you build more wealth over the years. 

Emotional Decision-Making Doesn’t Work for Your Investments

Money is emotional. Anyone who’s ever felt a sense of guilt or pleasure when spending money knows this. When it comes to spending, your emotions can help you make financial decisions in line with your values. But when it comes to investing , these types of decisions can quickly derail your financial strategy. When investing long-term, you must leave your emotions out of the picture.

Why is it so important to avoid emotional decision-making? In short, your emotions during a market downturn—fear, panic, anxiety—cause you to want to do the opposite of what’s best for your portfolio. Emotional decisions don’t take your long-term plans into account. Instead, they only consider the present moment.

When you sell an investment because you’re panicking at the moment, you miss out on the opportunity for that investment to continue to grow. And even though it may not sound like a big deal, missing out on these opportunities can make a huge difference in your portfolio. 

For example, if you invested $10,000 in the S&P 500 in 1999—and left your investments alone through 2018—you’d have ended up with just shy of $30,000 twenty years later . However, if you panicked and missed the best 10 days in the market during that same 20-year period, you’d have ended up with less than $15,000 .  

So, how can you avoid emotional decision-making? A long-term perspective is key.

Invest With a Long-Term Perspective

The key to a good investment strategy is thinking long-term and even looking back at history. If you look at data from any major market downturn over the last century, what happens after each? 

A market up turn. 

Yep—even though recessions can leave a lasting emotional impact, history shows that the market recovers. And these downturns may be shorter than you think—since the end of WWII, the average length of a recession was less than 11 months . 

What does this mean for an anxious investor? When you’re tempted to sell in a panic, remember that the market has always recovered, on average, within a year. 

Keep this long-term perspective in mind when creating an investment plan. Generally, you can afford to take on more risk the further away you are from retirement. Because even if your portfolio loses value during a market downturn, you’ll have plenty of time to let the market recover. 

As you approach retirement, you’ll likely want to reallocate your investments so your portfolio is more conservative. Doing so will ensure that if the market takes a downturn when you’re a few years away from retirement, you won’t see a dramatic drop in your portfolio’s value. 

Investment strategy examples

You can’t control the market, but you can control your investment strategy and the decisions you make. There are countless ways to invest, but here are a few strategies that can help you plan long-term:

  • Index investing: This strategy allows you to invest in a diversified range of securities through a single, passive fund, usually at an affordable price. The goal of an index fund is to replicate the performance of a particular index. 

 

  • Dollar-cost averaging: Dollar-cost averaging is the process of purchasing investments consistently over time at a fixed cost. This strategy smooths out the cost of buying securities so when the market is down, you can get a bigger bang for your buck. 


  • Buy-and-hold investing: In short, this is the strategy we suggest to anyone hoping to avoid panic selling. Rather than trying to time the market, buy-and-hold investing means you buy investments intending to hold them long-term. This strategy relies on a long-term perspective.

 

These strategies, along with others, aren’t mutually exclusive. It may be worth talking with a financial advisor to determine which investment strategies will work best for you, your risk tolerance, and your goals.

4 Tips for Reaching Your Investment Goals (Without Panic Selling)

We can tell you again and again how important it is to avoid panic selling, but it also helps to have some practical tips to put into practice. Here are a few to employ right now: 

1. Have a cash buffer.

When you’re trying to dig yourself out of debt, an emergency fund can keep you from falling back on credit cards. But an emergency fund isn’t just for keeping yourself out of debt, it can keep you from being tempted to cash out your investments, too.

Having a cash buffer on hand will prevent you from being tempted to sell your investments if you get into a situation where you need cash. Know how much money you need to have on hand to feel safe in case of an emergency, and turn to this buffer, instead of your investments, when needed.

2. Don’t use investing for short-term goals.

If you want to pay for a wedding, a house, or your kid’s college education within the next year or two, don’t invest that money. The market may take a downturn, and, when you need the money, it will have lost value. 

When it comes to short-term deadlines, you can’t afford more time in the market for your investments to recover if they happen to lose value. Instead, only use investing for long-term (and sometimes medium-term) goals. And consider a high-yield savings account for short-term goals. 

3. Disconnect from the media (and your investment accounts).

When all you hear and read in the news are anxiety-inducing stories about the bleak economy, it’s no wonder you’re tempted to panic sell and abandon your long-term plan. The doom and gloom are enough to make anyone want to pull out their cash and avoid the tumult. Similarly, checking your account balances during a downturn can be panic-inducing. So just avoid it altogether. 

Instead, rest easy knowing you’ve planned your investments wisely, and temporary market downturns won’t disrupt your strategy in the long run.

4. Get professional financial planning help.

You can plan long-term, avoid looking at your accounts, and save up a generous cash cushion, but sometimes it’s worth the peace of mind to consult a professional, too. If you have any doubts about your investment strategy — or simply want a second opinion — a fee-only fiduciary financial advisor can help. 

Whether you want to leave the strategy to a professional or you just need someone to talk you down from panic selling, it pays — literally — to have an advisor with your best interests at heart. 

Ready to team up with a financial advisor to make sure your investment strategy is capable of long-term success?

Give us a call at 877.333.1015, email us at info@fivepinewealth.com , or visit our website to learn more about what it’s like to work with us.

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What High Earners Overlook After Maxing Out Their 401(k)

January 26, 2026
Key Takeaways High earners maxing out 401(k)s at $24,500 are only saving about 8% of a $300,000 income in their primary retirement account. The mega backdoor Roth strategy can increase total 401(k) contributions to $72,000 annually with tax-free growth. A comprehensive approach can create nearly $3 million in additional retirement wealth over 20 years. It's 2026. You're checking all the boxes. You're earning upwards of $300,000 annually, and you're maxing out your 401(k) every year. You've reached the $24,500 contribution limit and feel confident about securing your financial future. Then you realize $24,500 represents less than 8% of your income. Over 20 years, this gap adds up to millions in lost opportunity. Thankfully, you're not stuck with the basic 401(k) playbook. There are sophisticated strategies beyond your contribution limit. 5 Strategic Moves for High Earners with Maxed-Out 401(k)s Here are five sophisticated strategies that can help you build wealth beyond your basic 401(k) contributions. All projections assume a 7% average annual return and are estimates for illustrative purposes. 1. Mega Backdoor Roth Contributions If your employer's 401(k) plan allows after-tax contributions, this could be your biggest opportunity. With employee contributions, employer match, and after-tax contributions, the combined 401(k) limit for 2026 is $72,000 ($80,000 if you're 50 or older). The mega backdoor Roth works because you immediately convert those after-tax contributions into a Roth account, where they grow tax-free forever. The catch: Not all employers offer this option. You need a plan that permits after-tax contributions and in-service Roth conversions. The impact: The available space for after-tax contributions depends on your employer match. With a typical employer match of 3-6% (roughly $10,000-$21,000 on a $350,000 salary), you could contribute approximately $26,500-$37,000 annually. At 7% average returns over 20 years, this creates approximately $1.1-$1.5 million in additional tax-free retirement savings. 2. Donor-Advised Funds for Charitable Giving If you're charitably inclined, donor-advised funds (DAFs) offer a way to bunch several years of charitable contributions into one tax year, maximizing your itemized deductions while still spreading your giving over time. You get an immediate tax deduction for the full contribution, but you can recommend grants to charities over many years. The funds grow tax-free in the meantime. The catch: Once you contribute to a DAF, the money is irrevocably committed to charity. You can't get it back for personal use. The impact: Contributing $50,000 to a DAF in a high-income year (versus giving $10,000 annually) can create immediate federal tax savings of $15,000-$18,500 while still allowing you to support the same charities over five years. 3. Taxable Brokerage Accounts with Tax-Loss Harvesting Once you've maximized tax-advantaged accounts, strategic taxable investing becomes your next move. The key is working with a financial advisor who implements systematic tax-loss harvesting throughout the year. Tax-loss harvesting involves selling investments at a loss to offset capital gains elsewhere. Done strategically, this can save thousands in taxes annually. The catch: Long-term capital gain rates (0%, 15%, or 20%) are lower than ordinary income tax rates, but you're still paying taxes on gains. It's less tax-efficient than retirement accounts, but far better than ignoring tax optimization. The impact: For high earners in the 35-37% ordinary income brackets, the difference between long-term capital gains (20%) and ordinary rates is significant. Effective tax-loss harvesting on $50,000 in annual gains over 20 years could save $150,000+ in taxes. 4. Health Savings Account (HSA) Triple Tax Advantage HSAs offer a unique triple tax benefit: tax-deductible contributions, tax-free growth, and tax-free withdrawals for qualified medical expenses. With 2026 contribution limits of $4,400 for individuals and $8,750 for families, this adds another powerful layer to your strategy. You can invest HSA funds just like an IRA and let them grow for decades. After age 65, you can withdraw the funds for any purpose, medical or otherwise. The catch: You must have a high-deductible health plan to qualify for an HSA. After age 65, non-medical withdrawals are taxed as ordinary income (like traditional IRA distributions), but you still benefit from the upfront deduction and decades of tax-free growth. The impact: Contributing the family maximum ($8,750) annually for 20 years at a 7% average annual return creates approximately $355,000-$360,000 in tax-advantaged savings. 5. Backdoor Roth IRA Contributions Not to be confused with mega backdoor Roth contributions! Even if your income exceeds the Roth IRA contribution limits, you can still fund a Roth through the backdoor method: make a non-deductible contribution to a traditional IRA, then immediately convert it to a Roth IRA. The catch: If you have existing traditional IRA balances, the pro-rata rule complicates things. You may want to consider rolling those funds into your 401(k) first if your plan allows. The impact: Contributing $7,000 annually through the backdoor Roth for 20 years at 7% average annual return creates approximately $285,000-$290,000 in tax-free retirement savings. What Compounding These Strategies Looks Like Over 20 Years Let’s look at approximate outcomes based on a 7% average annual return. 401(k) Only: Annual contribution: $24,500 Total after 20 years: ~$1M 401(k) + Mega Backdoor Roth: Annual contribution: $72,000 Total after 20 years: ~$3M Note: Mega backdoor Roth space varies based on your employer's match. These calculations assume you're maximizing the total annual limit. Comprehensive Approach (under age 50): Mega Backdoor Roth: ~$3.0M HSA: ~$350K-$360K Backdoor Roth IRA: ~$285K-$290K Strategic taxable investing with tax-loss harvesting Total retirement savings: ~$3.6M+, plus taxable investments Comprehensive Approach (ages 50-59): With higher contribution limits and catch-up contributions, total retirement savings can reach ~$4M+ over 20 years. Comprehensive Approach (ages 60–63 with enhanced catch-up contributions) Higher contribution limits during peak earning years allow for meaningful acceleration of retirement savings. The exact impact depends on timing, contribution duration, and existing balances. The Bottom Line The difference between stopping at your basic 401(k) and implementing a comprehensive strategy can approach $3 million or more in additional retirement wealth over time. Why Strategic Coordination Matters These aren't either/or decisions. The most effective approach coordinates multiple strategies while ensuring everything works together. At Five Pine Wealth Management , we help high-earning clients build comprehensive plans that go beyond the 401(k). We coordinate your employer benefits, tax strategies, and investment accounts to create a cohesive approach that maximizes your wealth-building potential. This requires working across several areas: Analyzing your employer's 401(k) plan for mega backdoor Roth opportunities Implementing systematic tax-loss harvesting in taxable accounts Coordinating Roth conversions and backdoor contributions Optimizing your HSA as a long-term retirement vehicle Ensuring charitable giving strategies align with your tax situation Maximizing catch-up contributions when you reach milestone ages As fiduciary advisors, we're legally obligated to act in your best interest. That means we're focused on strategies that serve your goals, not products that generate commissions. Ready to see what's possible beyond your 401(k)? Email us at info@fivepinewealth.com or call 877.333.1015 to schedule a conversation about your specific situation. Frequently Asked Questions (FAQs) Q: Does my employer's 401(k) plan automatically allow mega backdoor Roth contributions? A: No. You need a plan that permits after-tax contributions and in-service conversions to Roth. Check with your HR department. Q: How do I prioritize which investment strategies to use? A: Generally, maximize employer match first (it's free money), then fully fund your 401(k), explore Mega Backdoor Roth if available, max out your HSA, consider backdoor Roth IRA contributions, and then move to taxable accounts with tax-loss harvesting. We can help determine the right sequence for your circumstances.

The Portfolio Decisions That Matter 10 Years Before Retirement

December 22, 2025
Key Takeaways Your guaranteed income sources (pensions, Social Security) matter more than your age when deciding allocation. Retiring at 65 doesn't mean your timeline ends. You likely have 20-30 years of investing ahead. Think in time buckets: near-term stability, mid-term balance, long-term growth. You're 55 years old with over a million dollars saved for retirement. Your 401(k) statements arrive each month, and you find yourself questioning whether your current allocation still makes sense. Should you be moving everything to bonds? Keeping it all in stocks? Something in between? There's no single "correct" asset allocation for everyone in this position. What works for you depends on factors unique to your situation: your retirement income sources, spending needs, and risk tolerance. Let's look at what matters most as you approach this major life transition. Why Asset Allocation Changes as Retirement Approaches When you’re 30 or 40, your investment timeline stretches decades into the future. When you’re 55 and looking to retire at 65, that equation changes because you’re no longer just building wealth: you’re preparing to start spending it. You need enough growth to keep pace with inflation and fund decades of retirement, but you also need stability to avoid the need to sell investments during market downturns. At this point, asset allocation 10 years before retirement is more nuanced than a simple “more conservative” approach. Understanding Your Actual Time Horizon Hitting retirement age doesn't make your investment timeline shrink to zero. If you retire at 65 and live to 90, that's a 25-year investment horizon. Think about your money in buckets based on when you'll need it: Time Horizon Investment Approach Example Needs Short-Term (Years 1-5 of Retirement) Stable & accessible funds Monthly living expenses, healthcare costs, and early travel plans Medium-Term (Years 6-15) Moderate risk; balanced growth Home repairs, care and income replacement, and helping grandchildren with college Long-Term (Years 16+) Growth-oriented with a Long-term care expenses, decades-long timeline legacy planning, and extended longevity needs This bucket approach helps you think beyond simple stock-versus-bond percentages. Asset Allocation 10 Years Before Retirement: Starting Points While there's no one-size-fits-all answer, here are some reasonable starting frameworks: Conservative Approach (60% stocks / 40% bonds) : Makes sense if you have minimal guaranteed income or plan to begin drawing heavily from your portfolio upon retirement. Moderate Approach (70% stocks / 30% bonds) : Works well for those with some guaranteed income sources, moderate risk tolerance, and a flexible withdrawal strategy. Growth-Oriented Approach (80% stocks / 20% bonds) : Can be appropriate if you have substantial guaranteed income covering basic expenses and the flexibility to reduce spending temporarily as needed. Remember, these are starting points for discussion, not recommendations. 3 Steps to Evaluate Your Current Allocation Ready to see if your current allocation still makes sense? Here's how to start: Step 1: Calculate your current stock/bond split. Pull your recent statements and add up everything in stocks (including mutual funds and ETFs) versus bonds. Divide each by your total portfolio to get percentages. Step 2: List your guaranteed retirement income. Write down income sources that aren't portfolio-dependent: Social Security (estimate at ssa.gov), pensions, annuities, rental income, or planned part-time work. Total the monthly amount. Step 3: Calculate your coverage gap. Estimate monthly retirement expenses, then subtract your guaranteed income. If guaranteed income covers 70-80%+ of expenses, you can be more growth-oriented. Under 50% coverage means you'll need a more balanced approach. When to Adjust Your Allocation Here are specific triggers that signal it's time to review and potentially adjust: Your allocation has drifted more than 5% from target. If you started at 70/30 stocks to bonds and market movements have pushed you to 77/23, it's time to rebalance back to your target. Your retirement timeline changes significantly. Planning to retire at 60 instead of 65? That's a trigger. Every two years of timeline shift warrants a fresh look at your allocation. Major health changes occur. A serious diagnosis that changes your life expectancy or healthcare costs should prompt an allocation review. You gain or lose a guaranteed income source. Inheriting a pension through remarriage, losing expected Social Security benefits through divorce, or discovering your pension is underfunded. Market volatility affects your sleep. If you're checking your portfolio daily and feeling genuine anxiety about normal market movements, your allocation might be too aggressive for your comfort, and that's a valid reason to adjust. Beyond Stocks and Bonds Modern retirement planning involves more than just deciding your stock-to-bond ratio. Consider international diversification (20-30% of your stock allocation), real estate exposure through REITs, cash reserves covering 1-2 years of spending, and income-producing investments such as dividend-paying stocks. The Biggest Mistake: Becoming Too Conservative Too Soon Moving everything to bonds at 55 might feel safer, but it creates two significant problems. First, you're almost guaranteeing that inflation will outpace your returns over a 30-year retirement. Second, you're missing a decade of potential growth during your peak earning and saving years. The difference between 60% and 80% stock allocation over 10 years can mean hundreds of thousands of dollars in portfolio value. Being too conservative can be just as risky as being too aggressive, just in different ways. Questions to Ask Yourself As you think about your asset allocation for the next 10 years: What percentage of my retirement spending will be covered by Social Security, pensions, or other guaranteed income? How flexible is my retirement budget? Could I reduce spending by 10-20% during a market downturn? What's my emotional reaction to seeing my portfolio drop 20% or more? Do I plan to leave money to heirs, or is my goal to spend most of it during retirement? Your honest answers to these questions matter more than your age or any generic allocation rule. Work With Professionals Who Understand Your Complete Picture At Five Pine Wealth Management, we help clients work through these decisions by looking at their complete financial picture. We stress-test different allocation strategies against various market scenarios, coordinate withdrawal strategies with tax planning, and help clients understand the trade-offs between different approaches. If you're within 10 years of retirement and wondering whether your current allocation still makes sense, let's talk. Email us at info@fivepinewealth.com or call 877.333.1015 to schedule a conversation. Frequently Asked Questions (FAQs) Q: What is the rule of thumb for asset allocation by age? A: Traditional rules like "subtract your age from 100" are oversimplified. Your allocation should be based on your guaranteed income sources, spending flexibility, and risk tolerance; not just your age. Q: Should I move my 401(k) to bonds before retirement? A: Not entirely. You still need growth to outpace inflation. Gradually shift toward a balanced allocation (60-80% stocks, depending on your situation) and keep 1-2 years of expenses in stable investments. Q: What's the difference between stocks and bonds in a retirement portfolio?  A: Stocks provide growth potential to keep pace with inflation but come with volatility. Bonds offer stability and income but typically don't grow as much.