Fall 2008

Weathering market downturns - Handling market fluctuations with confidence

By: Hartford Life Insurance Company and Hartford Securities Distribution Company, Inc

No matter how much you have invested in your retirement plan, keeping your eye on the financial markets makes sense. But markets fluctuate daily, and market downturns can test your confidence. Predicting the duration and lasting effect of any downturn is extremely difficult. So when you think market changes are serious enough for you to take action, it's best not to go it alone.

If possible, talk with a financial professional to see how market declines may affect your portfolio. By keeping your focus on your long-term interests, you may avoid making decisions based on emotions alone.

Keep it in perspective.

Market performance changes daily-and so does news coverage of market events. While a slow news day can change the way market moves are reported, it is important to see the market in the context of long-term trends.

Keeping these investment basics in mind can also help you maintain a balanced outlook.

  • know your goals
  • take your time
  • diversify your portfolio
  • stick to your plan

Review your goals and timeframe.

A market downturn gives you a chance to review the goals and timeframe you had in mind when you started investing. If the goals-say, college bills or retirement-are still several years off, you may want to do nothing and ride out the downturn.

If some of your investment timeframes are approaching, you may want to speak with a financial professional about adjusting your portfolio to help insulate against future losses. But keep in mind that even if you have a shorter timeframe, abandoning the stock market during a downturn may not be the best idea, as you may miss the opportunity to make up for any losses you've incurred.

Time on your side.

Time is one of an investor's greatest allies, so knowing when you need your money is almost as important as knowing why you need it. Over nearly all long-term periods-five, 10, 20 years and more-stock returns, as represented by the Standard & Poor's 500 Index (S&P 500), have outpaced inflation.*

So, while a market downturn may result in some short- to intermediate-term losses, your long-term returns might still be in line with your retirement goals. Lower stock prices during a market downturn can also be a buying opportunity. The key is knowing the value of time-and using it to your advantage.

Historically, there's been no better way to reduce the risk of stocks and enhance potential returns than through long-term investing.**

Keep your portfolio in balance.

Smart investors also know that diversification-investing in different types of investments and markets-allows them to pursue opportunity while providing a level of protection against heavy losses in any one investment. Take a look at your portfolio with a financial professional, if possible, to make sure you've got an appropriate investment mix for your goals and risk tolerance. Keep in mind that diversification doesn't protect against loss in a declining market.

Stick to your plan.

If you're properly prepared with a long-term plan, the best response in a down market may be to do nothing.

Whatever you do, stay informed. A stock market downturn can test your confidence, but it's no time for hasty actions. A disciplined, long-term program is your best strategy for weathering short-term changes in any investment climate.

* Source: Lipper. Common stocks generally have provided an opportunity for more capital appreciation than fixed income investments but have also been subject to greater market fluctuations. The S&P 500 is an unmanaged, commonly used measure of common stock total return performance. It is not possible to invest directly in an index. Hypothetical results are for illustrative purposes only and are not intended to represent the future performance of any investment option.

** Keep in mind that investments in stocks can fluctuate in value and, when redeemed, may be worth more or less than the original cost. Past performance is no guarantee of future results.

"The Hartford" is The Hartford Financial Services Group, Inc. and its subsidiaries, including issuing company

Hartford Life Insurance Company and Hartford Securities Distribution Company, Inc. ("HSD"). HSD (member NASD and SIPC), a registered broker/dealer affiliate of The Hartford, has established certain service programs for retirement plans, including defined contribution employee retirement benefit plans, through which a sponsor or administrator of a Plan may invest in mutual funds on behalf of Plan Participants.

Retirement programs can be funded by group variable annuity products (HL-14991; NY & FL; HL-14973; HL-15811; HVL-11002 and HVL-21002 series; HVL-14000; HVL-14001; HVL-20000; HL-17402; HL-14848; HL-17402; HL-15420 |with Rider HL-16957) and group variable funding agreements (HL-16553 and HL-16553 ((NY)), as applicable, issued by Hartford Life Insurance Company (Simsbury, CT). Group variable annuity contracts are underwritten and distributed by Hartford Securities Distribution Company, Inc., where applicable. Retirement programs can be funded by group fixed annuities (HL-19799) issued by Hartford Life Insurance Company (Simsbury, CT) and can also invest in mutual funds through custodial accounts.