4 Tips for Filtering The Noise About Market Turbulence
Stock gyrations have become a fact of life. So turn off your emotions and develop a smart, measured approach on how to deal with them.
Up and down, and down and up. If stock market volatility has you feeling a little squeamish these days, you’re not alone. Market swings can rattle even seasoned investors.
It’s important to remember, though, that this roller-coaster ride is a normal part of investing. It’s how you react to the dips and plunges — and how you prepare for them — that can make a difference in your portfolio’s long-term success.
If you’re not sure where you stand with your investments, that queasy feeling in the pit of your stomach should be a reminder to review your strategies now to be sure they’re a good fit with your risk tolerance, your goals and your future income needs.
From just $107.88 $24.99 for Kiplinger Personal Finance
Become a smarter, better informed investor. Subscribe from just $107.88 $24.99, plus get up to 4 Special Issues
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Or, if you’re the type of investor who watches the market’s every move and you’re close to panicking due to market turbulence, you may want to reassess your mix and find one that makes you less anxious day to day.
Either way, what you don’t want right now is to make decisions based on your emotions. Here are four ways to help keep that from happening:
1. Get some perspective.
Market drops get lots of attention. They lead the news, and the pundits pounce. It’s hard to tell sometimes if the market is experiencing a hiccup or a heart attack. If you’re only checking your account statements when there’s a big market downturn — and you gasp at what you lost that month or quarter — you may be missing the overall picture. (And, of course, the same holds true for record increases.) I encourage clients to stay on top of their statements and to call if they have concerns or questions. And know your timeline: An investor who is near or close to retirement typically should be taking on less risk than one who has years to recover from a big loss.
2. Be disciplined about diversification.
One way to help manage stock market volatility is to pick a mix of investments (stocks, bonds, real estate, commodities, etc.) that move up and down under different market conditions. We see people all the time who limit their choices to redundant mutual funds. Or they get excited about a certain type of stock — tech, for example — and go all in on that one sector. Then, if it falls apart, their portfolio does as well. Keep an open mind about your asset allocation (your financial adviser may have suggestions you haven’t even heard of) and look at rebalancing regularly. Those market rises and falls can throw your allocation out of whack without you even realizing it.
3. Stick to your plan.
One of the worst things you can do as an investor is to go from being conservative to aggressive to conservative again based on the whims of the market. Trying to time the market is impossible, even for the most brilliant professionals. Be honest with yourself about your personal risk tolerance (your ability to handle a loss both emotionally and financially). Even if your time horizon is long enough to warrant an aggressive approach, it’s important that you feel comfortable with the short-term ups and downs you’ll experience. The deeper the hole, the harder it is to dig yourself out. If that’s not for you, for whatever reason, the answer is to avoid the hole.
4. Consider getting some help.
An experienced financial adviser can interpret what’s happening in the news, how it’s affecting the market and how it applies to your portfolio. Is China really a factor? Are tariffs the beginning of the end? Are there actually opportunities out there to be had when all you’re hearing is “expert” pessimism? An adviser can hold your hand as the markets rush and roil, and proactively help you decide which “ride” your stomach and wallet can manage. One of the top ways to battle back your fears of stock market volatility is to stay informed, and your adviser can offer information and options.
It’s tough to tune out all the talk about market turbulence — especially after we’ve spent so many years feeling bold and bullish. But developing and maintaining a solid financial plan can help keep the focus on what’s important to you — a confident future for you and your family.
Kim Franke-Folstad contributed to this article.
-
Stocks Close Down as Gold, Silver Spiral: Stock Market TodayA "long-overdue correction" temporarily halted a massive rally in gold and silver, while the Dow took a hit from negative reactions to blue-chip earnings.
-
Pay-As-You-Go vs. Monthly Plans: Which Saves More for Light Phone Users?Light phone users may be paying for data they never use. Here's how pay-as-you-go and low-cost monthly plans really compare.
-
Trump Nominates Kevin Warsh to Fed Chair. How Will This Impact Savers?Here's a look at how Warsh could influence future Fed policy if he's confirmed.
-
6 Key Ways to Plan for Financial Success in 2026 (and Avoid a Portfolio 'Death Spiral')Use last year's tax data to help guide you as you consider this year's taxes, asset allocation and sources of the regular income you'll need in retirement.
-
A Financial Plan Is a Living Document: Is Yours Still Breathing?If you've made a financial plan, congratulations, but have you reviewed it recently? Here are six reasons why your plan needs regular TLC.
-
Your Guide to Financial Stability as a Military Spouse, Courtesy of a Financial PlannerThese practical resources and benefits can help military spouses with managing a budget, tax and retirement planning, as well as supporting their own career
-
3 Steps to Keep Your Digital Data Safe, Courtesy of a Financial PlannerAs data breaches and cyberattacks increase, it's vital to maintain good data hygiene and reduce your personal information footprint. Find out how.
-
Here's Why You Can Afford to Ignore College Sticker PricesCollege tuition fees can seem prohibitive, but don't let advertised prices stop you from applying. Instead, focus on net costs after grants and scholarships.
-
Today's Senior Living Communities Are Not Your Grandma's 'Old Folks' Home': An Expert Guide to Shopping for the Right FitSenior living facilities have improved and are as diverse as the people who inhabit them. Now, they're more than just a place to go — they're a place to grow.
-
3 Common Misconceptions About Working With a Financial PlannerThink financial planners are only for the wealthy and that AI can replace human advice? Nope. Even people with moderate wealth need professional advice.
-
Should You Consider Investing in the Quantum Computing Sector? This Investment Adviser Has Some SuggestionsInvestors interested in quantum computing could consider ETFs focused on cloud services enabling small businesses to use big technology.
