Volatility  >  5 Tips for Turbulent Times

Markets in Motion Series | 5 Tips for Turbulent Times

History shows that soaring bull markets and tumbling bear markets don't last a lifetime. While the highs may spark lots of optimism, the lows can bring even greater pessimism. Investors who focus on their long-term goals may have a better chance of withstanding rocky market periods.

The longer your money is invested, the more likely you may be able to manage market fluctuations.

Always Think in Terms of Your Long-term Plan

A well-defined investment strategy that's based on a good understanding of your goals, how you feel about risk and how much time you have left before you'll need the money may help you make better investment decisions. Here are five tips for keeping long-term in focus.

One

Keep Emotions in Check

  • Resist chasing the performance of high-flying investments. Today's big winners can quickly become tomorrow's big losers.
  • Hold on to investments that are core to your long-term plan, even if you are tempted to sell to cut losses.
  • Tune out the "noise" of political events or media hype. While they may temporarily impact markets, they can also lead to buying and selling at the wrong time.

 

Two

Stay in the Mix

  • Keep a balanced portfolio of stocks, bonds and money market funds which may help reduce the overall risk in your portfolio.
  • Choose investments that don't react the same way to market events to help smooth out performance. When one investment type isn't doing well, another may be in favor.

 

Three

Mix Up Investments Even More

Go beyond the general types of stocks, bonds and cash for diversification. Each of these can be split further into more specialized categories that take advantage of different sections and behaviors of the markets.

This hypothetical scenario is an example of what a well diversified portfolio might look like. A diversified portfolio based on your individual needs may address your objectives, comfort with risk and help you stay focused on your long-term goals.

 

Four

Review Regularly

  • Analyze your portfolio at least once a year to make sure the mix continues to meet your goals, your comfort with volatility and your investment timeframe.
  • Rebalance when you need to adjust for changes in the value of your stock, bond and money market investments and to get back to your desired investment mix.

 

Five

Don't Go it Alone

The professional investment management available through mutual funds may be especially valuable to you during times of uncertain market directions.

The Bottom Line

Keeping your long-term plan in mind instead of reacting to current market conditions may help you better withstand market ups and downs.

More on Volatility

Market volatility can rattle even the most committed clients. Help tame their fears.

Learn More

Markets in Motion Series

5 Tips for Turbulent Times

Download PDF

Investment return and principal value of security investments will fluctuate. The value at the time of redemption may be more or less than the original cost. Past performance is no guarantee of future results.

This material has been prepared for educational purposes only. It is not intended to provide, and should not be relied upon for, investment, accounting, legal or tax advice.

Diversification does not assure a profit nor does it protect against loss of principal.

International investing involves special risk considerations, including economic and political conditions, inflation rates and currency fluctuations.

Generally, as interest rates rise, bond prices fall. The opposite is true when interest rates decline.