How to Survive a Volatile Market – and Thrive

Since the COVID-19 pandemic began, the stock market has fluctuated greatly, sometimes within a day. It can send shivers down an investor’s spine. Don’t let it.

You can survive this and even thrive. Here’s how:

Don’t Panic

Typically, people invest for the long-term not the short-term, and historically, the market has increased over time and always recovered from past setbacks. This one will pass, too, so stick to your plan. Pulling out of the market during a downturn locks in the losses.

“The market goes up and down,” says Jennifer Stice, Director of Trust and Investments for Town and Country Bank. “Don’t make rash decisions based on fear. Fundamentally, before all this started, the economy was good.”

Keep paying that retirement fund. You don’t want temporary emotions to derail your long-term plan or security and seeing your balance increase with your contributions may make you feel better until the market recovers.

Do You Need to Reevaluate Your Plan?

Ask yourself: Have your cash-flow needs changed? Has your tolerance for risk changed? Are you close to retirement when you’ll need to withdraw from your savings?

“People tend to be a lot more willing to take on risk in their investments when the market is up. When the market is down, it’s kind of a gut check for their risk tolerance,” says Stice. In general, the higher the risk with an investment, the greater the possible return; the lower the risk, the lower the return.

If you can’t sleep at night because you’re worried about the market, talk to your investment adviser and see if it’s a good time for you to rebalance your portfolio and decrease your risk by making it more conservative. You can always rebalance your portfolio again when the market changes to adjust for more risk.

The Silver Linings

If you contribute money regularly to a retirement plan or the stock market, your money goes farther now than it did in December and January when the market was at an all-time high, Stice says. “Your dollar is buying more now.” That will pay off, literally, when the market recovers and you have increased shares to pay returns.

If your cash flow is adequate, you have emergency savings, and your retirement plan is on track, now may be a good time to look for good stocks available at a discount. A down market is an opportunity to get good deals that will pay off later.

Bottom line – if you have any concerns about the market, your investment strategy, or your current cash flow, talk to your investment adviser. They can make suggestions based on your particular situation and goals.