Riding Out Market Events
Periods of gain and loss go hand-in-hand with investing. Even though the inevitable market downturns can test your resolve, there are three key things you can do to help maintain a balance between your investment goals and market conditions.
1. Keep it in perspective
Market dips, even the most severe, are generally short-lived. Despite periodic declines, the financial markets have historically risen over the long term. By holding your portfolio longer, you can decrease the overall effect of volatility and increase your potential return over the long term.
2. Assess and adjust
It’s natural that a volatile market can make you question your risk tolerance. Acknowledge how you feel and adjust your plan, if needed. But, don’t overdo it. It’s important to remain committed to your long-term investment goals.
3. Create balance
The investment landscape is constantly evolving. In recent years, new products that seek to limit investors’ exposure to volatility and provide diversification in times of turbulence have come to market. Consider talking to your financial advisor to see if these are right for you.
Investing with Volatility in Mind
Market fluctuations can make it difficult to determine the best time to invest. An automatic investment strategy, like dollar-cost averaging, can help. By investing a set amount at regular intervals, you buy more shares when the price is lower and fewer when the price is higher, helping you to avoid the risk of trying to time the market.