Are you worried about the uncertainty in the stock market? Here is what you should know.
December 21, 2022
Volatility and uncertainity in the stock market can be unsettling, but it’s important to remember that short-term market fluctuations are normal and should be expected. Nevertheless, here are a few things that investors may want to consider when the market is volatile:
1. Stay the course: If you have a long-term investment horizon, try not to let short-term market fluctuations derail your investment plan. Remember that the stock market will experience ups and downs, but it has historically trended upward over time.
2. Review your asset allocation: It’s a good idea to periodically review your asset allocation to ensure it’s still in line with your financial goals and risk tolerance. For example, if you’re concerned about market volatility, you may consider adjusting your asset allocation to include more stable investments, such as fixed income.
3. Be cautious with market timing: Trying to “time the market” by buying and selling stocks to capitalize on short-term price movements can be tempting. However, this can be difficult to do consistently and successfully, and it may lead to unnecessary transaction costs and taxes.
4. Don’t panic: It’s essential to stay calm and not let your emotions guide your investment decisions. It can be helpful to have a financial plan that considers market volatility, so you know what to expect and can stick to your plan even when the market is volatile.
It’s worth noting that every investor is different, and what may be appropriate for one person may not be suitable for another. Therefore, considering your financial goals and risk tolerance before making investment decisions is always a good idea.