When the Average Investor Can't Ride Out the Market Turmoil

After the dot.com bubble burst in the early 2000s, Mr Lars Staack decided to play it safe and invest his retirement savings in S&P 500 index funds, which are diversified and carry lower risk than owning individual stocks.

- Danielle Kaye

It was a strategy that brought him peace of mind for more than two decades—until US President Donald Trump was elected in November 2024. As he reviewed Mr. Trump's comments in support of sweeping tariffs, Mr. Staack, 62, who retired two years ago, became increasingly uneasy about the savings he planned to use for the rest of his retirement.

Those nerves about how Mr. Trump's economic policies might affect the stock market led him to start selling his index funds in January, moving them into bond and Treasury funds, which are seen as safe havens in times of volatility. He left about one-third of his savings in stocks. The daily swings last week, which included the market's worst single day in months, have made him consider moving even more of his assets into safer bonds, he said.

"I'm fumbling about, trying to figure out what is going to be the best way to preserve my retirement savings from a volatile economy, and from upcoming inflation," Mr. Staack said.

Many financial advisers are reiterating their usual advice during moments of angst: Do nothing and stay the course, assuming your financial plan is diversified and aligned with your goals. But the tumultuous rounds of trading have jolted people such as Mr. Staack, who has an immediate need for his investments.

The way he sees it, stock market index funds are no longer safe for people close to or in retirement—people who intend to use their assets in the near future and do not have the luxury of time to wait for the market to reverse course.

"What Trump and (Elon) Musk have done is unprecedented, so it seems like nothing is safe anymore," said Mr. Staack, who lives in Poway, California, outside San Diego, and was a Republican voter until 2016, when he started voting for Democrats.