With the US stock market all-time highs, many investors are worried about a potential downturn in the markets. On one hand, investors are bullish about the Trump administration’s pro-business policies. On the other hand, investors are worried about the Federal Reserve’s continued tightening of interest rates.

Nobody can predict the future of financial markets. However, it is important to understand the potential volatility of your investment portfolio. Studies by research firm Dalbar show that investors who tried to time the market have underperformed the S&P 500 by over 4.6% in the 20-year period from 1994-2014. Understanding the upside and potential risks of your portfolio help you stay invested through the ups and downs of the market. Last year, financial markets gained or lost more than 3% in four months last year. Volatility is a natural part of the stock market. Despite the fluctuations, the S&P 500 ended 2016 up over 12% for the year.

Maintaining a diversified portfolio is the best way to capitalize on the power of the stock market and to save for your retirement. If you have any questions about your 401(k), please reach out to an Advisor on your Money Intelligence team.