Market Volatility: 4 Ways You Can Manage ItJuly 2015
During 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.
Put these tips into practice when market fluctuations make you uncomfortable. Contact Commerce Trust for investor education or to find a trusted partner who can help you manage your investments through all market cycles.
Talk to a Commerce Trust advisor today at 855-295-7821.
- This article is intended to provide general information only.
As part of a series on how advisors can deliver value to their clients, Nick Fafoglia, CFA®, a senior Investment Portfolio Manager at Commerce Trust Company, helps investors re-examine their underlying motivations in making buy-sell decisions for their portfolios.
Billionaire, philanthropist and arguably one of the greatest investors of all time, Warren Buffett needs little introduction. He is known for delivering practical investment advice nearly everyone can use. Part of his genius lies in his ability to simplify complex ideas into bite-sized quotes that provide extraordinary insights such as the following.
It's a question every investor should ask and be asked. Why? Because no two investing personalities are alike, no one-size-fits-all investing formula exists, and every investor weighs the tradeoff between risk and return with a different scale.