There’s a lot of fear and uncertainty leading to market volatility. The Federal Reserve raised rates, Russia invaded Ukraine, and inflation is skyrocketing, increasing consumer costs.
Preparing for market volatility
The market is up and down, like a rollercoaster. At one point, as discussed in this video, we had one of the best weeks in the market since November 2020. That was in March 2022 when the Fed raised interest rates by one quarter of 1% to calm the market.
“The three major indices were up at least 5%. So, this has to feel good, right? It should feel good. But remember, investing is not an emotional game,” Todd Minear explained. “We’re going to see big swings up and we’re going to see big swings down, and you can’t time that. You can’t time day-to-day moves in the market. We expect the market to be higher in the long term.”
Navigating the market
No matter what the charts show, whether it’s an inverted yield curve, the week in the market, or a drop in the market, remember you’re a long-term investor. Stay on track with your investing goals, no matter what the market does. It’s always a good idea to make adjustments, but don’t overreact.
- Don’t worry about things you can’t control. That perspective will help keep your emotions in check when you see fluctuations in your investment accounts.
- Evaluate your portfolio. Are you diversified? Are you reaching your long-term goals? Talk with your financial advisor if you have questions.
- Find opportunities in every market. Even with the news isn’t what you want to hear, there may be an opportunity. In some volatile markets, you can buy low and sell high.
- How do you feel about your risk? At Open Road Wealth Management, we can help you with your risk tolerance. You may have thought you could withstand the market volatility, but when it’s the reality, it may be different because you see significant drops in your accounts. That’s ok. What you thought may be different than how it feels in reality. Talk to your financial advisor and make adjustments to your risk tolerance.
- Make adjustments to your budget. For example, if inflation is financially strapping you, set aside more money for your monthly budget.
- Assess your emergency fund. Do you have enough to survive a recession or personal emergency? Keep about a third of your living expenses in an emergency fund.
- Remember, you’re a long-term investor. “Your time horizon is the rest of your life!” Minear explained.
At Open Road Wealth Management, we’re here to guide you through your investment journey. See if we’re a match.