On the first trading day after deciding to strike Iran, President Donald Trump discussed White House decor and his “spectacular” and “most beautiful ballroom.”
“There’s your entrance to it right there,” Trump said Monday during a Medal of Honor ceremony. “In fact, it looks so nice. I think I’ll save money on the doors.”
To show how frugal he is, Trump said he may also keep the curtains he chose during his first term. “I always like gold,” he said, eliciting laughter from some attendees. “But I think we can save a lot of money.”
While the president jokes about saving on golden curtains and a ballroom door, many of us are watching news reports out of the Middle East and are concerned about the escalating conflict. With oil prices surging and the stock market acting jumpy, you might also be worried and wondering if your retirement fund is about to become a casualty of war.
However, history suggests that for most investors — whether you are new to investing or leaning into retirement — the key to weathering a jumpy market is avoiding making fear-driven trades, according to Christine Benz, director of personal finance and retirement planning for Morningstar. She is also the author of “How to Retire: 20 Lessons for a Happy, Successful, and Wealthy Retirement.”
“One of the biggest traps investors can fall into is using current events to drive their investment strategies,” Benz said. “They often overreact to news of geopolitical strife and make changes that they later regret.”
“Most people shouldn’t do anything in response to short-term market events,” she advised. “I much prefer the strategy of checking up on a portfolio on a regular, predetermined basis, once or twice a year or every quarter, at the most.”
She suggested using an investment policy statement (IPS) to outline your goals, target asset allocation and timing for portfolio changes.
“It just makes you a more disciplined investor,” Benz said. “You don’t want to be reactive, [because] you’re playing against professionals. It’s not like you’re playing against your neighbor in a tennis game. You’re playing against Serena Williams or a lot of machines at this point.”
Reviewing your portfolio on a preset schedule helps ensure that you’re not just responding to market volatility and uncertainty.
How should investors from different age groups think about recent events — or a potentially protracted conflict? Here is Benz’s advice, by generation:
For people in their 20s and 30s
Stick with a stock-heavy portfolio or use a target-date fund.
A target-date fund automatically adjusts its asset mix, shifting from aggressive growth (stocks) to conservative income (bonds) as you approach a specific retirement year.
At this life stage, a target-date fund will have about 90 percent in stocks.
“Market volatility is your friend, so increase your contributions when stocks are down if you have the funds to put to work, and also plan to boost your contributions when you get a raise,” she said.
If you have shorter-term financial goals that you’re investing for, such as a home down payment, make sure that portion of your portfolio isn’t all in stocks. If you have a time horizon of fewer than 10 years, and certainly if it’s under five years, you should be mostly in cash and bonds.
Make sure your portfolio is globally diversified to protect against a domestic market slump, she added. Avoiding international stocks can leave your portfolio exposed if the U.S. market underperforms its global peers.
In 2025, the S&P 500 returned 16 percent but still lagged several foreign stock markets, Kevin Bahr, chief analyst with the Center for Business and Economic Insight at the University of Wisconsin at Stevens Point, wrote in a blog post this year. Neighboring Canada and Mexico posted returns of 29 percent and 25 percent, respectively.
For people in their 40s and 50s
“These are peak earnings years for many investors, so this is a good life stage to max out your contributions to your retirement accounts if you possibly can,” Benz said.
If you’re over 50, especially, start taking some risk out of your portfolio, because the average retirement age is 62.
“People are often knocked out of the workforce for reasons they didn’t foresee, such as layoffs or health issues,” she said.
Target-date funds can also be a good choice for this age group and can serve as a check on whether your risk-taking is appropriate. The typical target-date fund for someone retiring in 2040 is 70 percent stocks.
For people five to 10 years from retirement
This is also a great life stage to max out your retirement plan contributions — and, if you can, take advantage of catch-up contributions — while also looking hard at your in-retirement budget.
“Your allocation to safer assets, especially bonds, should be growing,” Benz said.
The typical 2035 target-date fund has about 65 percent of its assets in stocks and the rest in bonds.
As you get closer to retirement, you should look at all your sources of income and where you can pull money if there is a significant market downturn.
“You don’t want to have to pull your living expenses from stocks after they’ve fallen,” Benz said. “Safer assets have performed worse than stocks over long time frames, but their potential for big losses is also much lower.”
For retirees
Benz said you should absolutely hold a “bulwark” of safe assets in your portfolio.
Ideally, you aim for about five to 10 years’ worth of anticipated portfolio withdrawals in a combination of cash and high-quality bonds, she said.
“That way, you could use those funds for spending money and not have to touch the stocks when they’re down,” she said.
My final take after my conversation with Benz: Historically, the math of the market stays the same. The investors who get hurt the most in a crisis aren’t the ones who stayed the course, but the ones who panicked and made decisions based on their fear.
The post As Iran tensions shake markets, here’s what you should (and shouldn’t) do appeared first on Washington Post.
