Dealing with short-term market volatility | submitted by Lauri Binius Droster
Over the last three years we’ve become far too accustomed to it. Stocks are down in the triple digits one day and up the same amount in the next week. Watching the financial news can create a state of near panic. And you’re hearing a different strategy from every angle.
You can’t be blamed for feeling uneasy and helpless. Luckily, through all of the market volatility we’ve seen, tried-and-true methods of coping with the ups and downs still hold true.
You also do not have to muddle through this process alone. Talk with your financial advisor regarding concerns and to develop a plan for all market conditions.
For in-depth help with your investor concerns, consult a financial advisor.
In the meantime, remember these key points while you watch the markets:
ÃÂ¢ Be prepared. Understand that with political pressures and global concerns, decisions can be made halfway across the world that have a ripple effect in markets around the globe. This can cause, for example, market interest rates to rise across the board, leading to declines in bond and stock prices. Such a drop could well be sharp, but it doesn’t necessarily predict an extended downturn. In fact, a decline would probably be short-term, as chaotic financial markets likely force political action to be taken more hastily. So, brace yourself for market drops, but don’t abandon a proven strategy of diversifying your investment dollars across a range of quality vehicles.
ÃÂ¢ Don’t make hasty decisions. Historically speaking, when short-term volatility occurs, it rarely lasts and markets have corrected themselves and still trend upward. So don’t rush into any investment decisions based on the most dismal scenario. The U.S. economy is still the largest and most powerful in the world.
ÃÂ¢ Look for opportunities. The investing markets have recovered handsomely from all kinds of adversity. In fact, in hindsight, we often recognize those times as opportunities in disguise. While it may seem counterintuitive, market declines may present a chance for investors seeking “deals” on securities that are trading for a comparatively lower price.
Remember, you’re investing for tomorrow’s goals. By staying calm and sticking with sound investment strategies proven to help you achieve long-term goals, you’ll be able to more smoothly ride the wave of market volatility.
This article is provided by Lauri Binius Droster, CFP, AWM, a financial advisor at RBC Wealth Management in Madison, and was prepared by or in cooperation with RBC Wealth Management. The information included in this article is not intended to be used as the primary basis for making investment decisions nor should it be construed as a recommendation to buy or sell any specific security. RBC Wealth Management does not endorse this organization or publication. Consult your investment professional for additional information and guidance. RBC Wealth Management does not provide tax or legal advice.
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