Over the past several weeks the global stock market has experienced increased volatility. It’s perfectly natural for this to increase anxiety, but it’s important to remember that these cycles are normal. In fact, without risk, the stock market wouldn’t provide higher returns than less risky or risk free investments. Here are a few reminders of how to prepare for and navigate volatile markets.
- Match your investments with the proper timeline. Money you expect to spend in the next 1-3 years should be in risk-free investments, like money market funds and CD’s. Bonds are designed for short to intermediate timeframes and your stocks are long term investments.
- Diversify your investments. Having the right mix of stocks and bonds and avoiding concentrated positions/industries can help minimize volatility.
- Stick with your investment plan. Roller coasters are safe unless you jump off in the middle of the ride. Timing the stock market is impossible.
We’ve all been through these types of events in the past and they all have one thing in common- they didn’t last forever.
