How Market Volatility Affects FRS Investment Plan Members

If you’re a member of the Florida Retirement System (FRS) Investment Plan, you’ve chosen a retirement option that gives you more control over your money — and with that control comes exposure to the ups and downs of the financial markets.

Periods of market volatility can feel unsettling, especially when you see your account balance fluctuate. However, understanding how volatility affects your investments — and what actions, if any, to take — can help you stay focused on your long-term goals.

Why Investment Plan Balances Fluctuate

The FRS Investment Plan is essentially a defined-contribution plan. Each paycheck, both you and your employer contribute a percentage of your salary, and the money is invested in the funds you select.

Your account grows based on:

• The contributions made by you and your employer

• Earnings (or losses) from your chosen investments

• Time in the plan

Because your account is invested in the market, its value will rise and fall as the markets do.

What to Do When the Market Declines

It’s natural to feel concerned when you see your balance drop, but here are some important points to keep in mind:

Stay Focused on the Long Term

Retirement investing is typically a multi-decade journey. Short-term market declines are normal and expected — and often followed by recoveries. Selling investments during a downturn may lock in losses and make it harder to recover when markets rebound.

Review Your Risk Tolerance

If market swings are making you nervous, it may be a good time to re-evaluate whether your investment choices match your comfort with risk and your time horizon. But avoid making decisions based solely on emotions or short-term events.

Consider Continuing Contributions

If you are comfortable continuing contributions to your retirement accounts through periods of market volatility, there could be a hidden advantage you could consider. If you are contributing to your account when your investment choices are at a lower price point, you may be able to see more growth from those contributions if the performance later stabilizes to the previous levels. This feeds into the old expression "Buy the dip".

Why Diversification Helps

The FRS Investment Plan offers a range of funds. Diversifying your investments — spreading your money across different types of assets — can help balance your portfolio. While diversification doesn’t prevent losses, it can potentially help smooth out the ups and downs over time.

If you’re unsure how to allocate your funds, you might consider hiring a professional to help you learn more about your options, and work with you to develop a portfolio based on your individualized needs.

Final Thoughts

Market volatility is a normal part of investing — and it’s something all FRS Investment Plan members will experience at some point. Staying informed, keeping a long-term perspective, and revisiting your strategy periodically can help you navigate these ups and downs with more confidence.

Remember: your retirement plan is just that — a plan — and it should be built to weather both good and bad market conditions over time.