Market Volatility: 4 Ways You Can Manage It

M. Betsy Wert
Commerce Trust Company

During periods of market volatility, many investors become nervous and begin to question their investment strategies. Remember that it is the nature of the markets to move up and down over the short term, so attempting to time the market is nearly impossible.

In these times, it is important to stay focused on your long-term goals. Being too cautious or aggressive is a luxury that most investors can’t afford. Below are four tips that you might find helpful if you find volatility disconcerting.

Set a Strategy and Stick To It
Investing to achieve your financial goals is a marathon, not a sprint. Don’t get off course to chase an investment fad or decide to sit on the sidelines because markets shift. Once you have a disciplined investment strategy that supports your long-term financial goals, stick to it. To ensure your strategy still supports your goals, review it annually or as life events, such as retirement, occur. After all, your goals are the reason you are investing.

Focus On What You Can Control
World events, inflation and economic growth are just a few factors you cannot control, so worrying about them doesn’t help. You can, however, control how much you spend or save, as well as the diversification within your portfolio. Focus on factors within your control to help manage stress.

Limit the Noise
If you get unnerved by the market, tune out the media. Watching and listening to “chatter” can increase your discomfort.

Empower Yourself Through Education
While you should refrain from making any major investment decisions if you are confused or feeling overwhelmed, the more you understand how investments work, the better you will be able to manage investment risk. Education is a great antidote to fear. iBi