If you’re like many investors, market volatility and the related ups and downs in your portfolio may make you feel uneasy. Markets were already weaker due to inflation concerns and sharp jumps in oil prices, but the conflict between Russia and Ukraine is the most recent event to cause instability in the markets. However, you should note that changes in the investment market are a normal part of economic cycles and investing.
Historically, many major events have had a dramatic short-term impact on the markets, such as Black Monday in 1987, the Dot-com Bubble Burst in 2000, 9/11 in 2001, the 2008 Financial Crisis and, more recently, the declaration of the pandemic. However, the markets have always recovered and continued to grow, surpassing previous levels. Generally, those who remain calm, stay invested and contribute regularly are rewarded in the long run.
During changes and declines in different investment markets, it’s important to remain focused on when you’ll need your savings or investments:
Short-term events may have little if any effect on your long-term retirement and savings goals if your investment portfolio is based on your risk tolerance and appropriately diversified across asset classes, sectors, investment styles, and geographic regions.
When things are going well, we tend to forget that there will inevitably be times when the markets aren’t as strong. Being patient during volatile financial times is easier said than done. Here are a few strategies to help you weather market fluctuations: