How to Deal with Market Volatility
If you’ve kept up with the stock market lately, then you probably know that it’s been like a roller coaster. You may be wondering what is going on with the financial markets? What does the fluctuation mean? And most importantly, how do you invest wisely?
First, don’t start pulling out all your money. Though it might seem tempting to push the emergency stop button, remember that market volatility is normal. The cycle of bull and bear is inevitable. Are you one of many people that sells investments during a market dip? You could be benefiting well-informed buyers because they know there’s potential for a return to its high. There’s an old saying about ‘buying the dip, and selling the high.’ Now, not all dips come with a benefit of a rise back up, and not all highs come immediately down, so it’s a good idea to take a long hard look before making any investment decisions. Remember, you don’t have to keep up with every headline every day. In fact, many recommend that you do the opposite and only check periodically—especially if you have a long-term investment.
Don’t Freak Out
Most of our instincts when losing money is to go crazy. Think about it, that’s our livelihood, our savings, inheritance, and legacy! Constantly watching the market doesn’t help. Keeping an excessively close eye can usually cause rash, and unbeneficial decisions, due to the drastic impulse we have to prevent further problems. Instead, consider sitting on it for a few days, maybe consult a financial professional, or do some additional research to see why a market moved the way it did, if there’s any need to push the panic button.
With a diversified portfolio, you have several ways to grow your portfolio, even if some of it performs poorly. Part of the strategy in diversification is to mitigate your risk, and not let your money be tied to any one or two stocks or industries. Use market volatility as a time to get a “checkup” on your portfolio to ensure everything else is on the up and up, and you’re not taking unnecessary losses, or maybe even spot potential growth opportunities. A financial professional can help ensure your investments still meet your goals, and that it’s performing the best it can in today’s market.
Remember the Past
The US stock market has recovered from every bear market to date. Some bear markets have taken longer to repair than others, and it may be these instances of portfolio pain that we need to remember the most. No one wants to be put in a situation where they may feel they will not recover their losses, so take stock on how you’re invested, and whether you’re putting too much in during a long growth streak. It’s a constant struggle between missing a huge opportunity, or losing value due to poor choices. Hindsight is always 20/20.
Let the statistics do the talking and analyze the portfolios that you’re in. Have more questions about the history of the stock market or the companies you’re invested in? A financial advisor may be able to give you a detailed rundown.
Talk to a Financial Professional
It’s very easy to ‘do it yourself’ these days. I can learn how to fix my plumbing thanks to YouTube, but I’m fairly certain I’d flood my house in the attempt. So why would you take that kind of chance with your portfolio? Speak to a professional that has knowledge of the industry and can help produce customizable strategies that may help reach your goals. Everyone has different risk tolerances, goals, and life situations that are unique and important to understand, in order to make the best decision possible. Remember, there’s no one-answer-fits-all when it comes to investing.
FREE Financial Strategy Session
If a doctor said you needed an expensive procedure, would you take it at face value, or consult another doctor for a second opinion? Think about other aspects in your life where you think you need a second opinion? Have you stopped to ask about what to do with your portfolio in case there’s a market decline?
A second opinion never hurts. Here at RGA, we value honest feedback, even if it means you don’t need our help. We are currently offering Free Financial Strategy Sessions which include an assessment of your portfolio. Schedule a time to have a conversation with us by clicking on the link in the description to receive a second opinion, and see if we find something you may have missed. You can also call us at 1-800-467-8152 or send an email to firstname.lastname@example.org to setup a time to talk. Just because the market is uncertain, doesn’t mean your finances have to be.