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Six Strategies for Volatile Markets

 

Key takeaways

  1. Uncertainty is a constant, and downturns happen frequently. But market setbacks have typically been followed by recoveries.
  2. Stay disciplined: Trying to time the market has proven challenging–and could cost you.
  3. Plan for a variety of markets: An investing approach built with your goals and situation in mind may help you cope with short-term volatility.
  4. Consider help: Work with your advisor to determine a strategy that fits your risk tolerance.

Triggers for market volatility can come in many different shapes and sizes–policy uncertainty in Washington, earnings reports, geopolitical unrest, the list is almost endless. And market swings can rattle even seasoned investors’ nerves. But volatility is part and parcel of investing.

“Dramatic moves in the market may cause you to question your strategy and worry about your money,” says Ann Dowd, CFP®, vice president at Fidelity Investments. “A natural reaction to that fear might be to reduce or eliminate any exposure to stocks, thinking it will stem further losses and calm your fears, but that may not make sense in the long run.”

Instead of being worried by volatility, be prepared. A well-defined investing plan tailored to your goals and financial situation can help you be ready for the normal ups and downs of the market, and to take advantage of opportunities as they arise.

“Market volatility should be a reminder for you to review your investments regularly and make sure you consider an investing strategy with exposure to different areas of the markets–U.S. small and large caps, international stocks, investment-grade bonds–to help match the overall risk in your portfolio to your personality and goals,” says Dowd.

Here’s how.

Source: Fidelity Investments | Six strategies for volatile markets