Broker Check
How To Stay Calm During Stock Market Volatility

How To Stay Calm During Stock Market Volatility

March 13, 2020

It’s been a bumpy ride in the markets over the past couple of weeks. Fears over coronavirus and a possible oil price war caused plunges in the Dow Jones Industrial Index and the S&P 500. As I write this, there is talk of how this plunge could spark a recession. If you’ve been brave enough to look at your investment portfolio lately, you could be feeling quite nervous. What should you do in seeking to protect your future? We have a few key points to keep in mind.

1. Don't panic

It’s normal to wonder if you need to make changes to your investments. However, making drastic changes, especially when they’re emotionally driven, is not advisable. Remember, you have worked with your financial advisor on a long-term investment plan to weather these ups and downs. Plunges will happen. It’s inevitable when investing. The good news, periods of increase have tended to outweigh periods of decline. All investments involve risk. The key is learning not to focus on short-term volatility.

2. Do be ready to rebalance

Plunges do offer an opportunity to take another look at your current investments and consider the possibility of re-aligning a few things. Are you too heavily invested in stocks? Maybe you should put a little more in bonds. Nervous investors should call their financial advisor and have this conversation. You may find yourself changing your tolerance for risk. You could come up with a plan if stocks continue their decline. Your advisor can help you with these decisions as you pursue the right plan for you.

3. Save more money

One of the reasons stock market plunges can make investors so nervous is because so much feels out of your control. One way to combat that? Put more money away. Some investors may choose to pump more money into their 401(k) if they’re not already at their maximum contribution. You may also want to beef up your emergency fund. Saving puts you more in control and can provide greater confidence.

It’s important to remember the stock market will experience wide swings from time to time. Rebalancing your portfolio is sometimes necessary due to market activity, changing priorities, and your age. Our Des Moines financial advisors at Compass Financial Services are here to listen, talk with you, and provide help as you pursue your own financial goals. Contact us to discuss this topic today.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly. Rebalancing a portfolio may cause investors to incur tax liabilities and/or transaction costs and does not assure a profit or protect against a loss.