How to Navigate Investment Strategies in a Volatile Market
Posted by Ocean Wealth
If you’ve ever spent any time tracking investment news, you’ve seen the term “volatile market” pop up here and there. While it’s not quite as dangerous as a volatile person, it’s still perilous. Much like a volatile person, a volatile market is usually characterized by wide price fluctuations and heavy trading. It’s almost like a market mood swing.
The best way to react to a volatile market is by making sure your investment strategies are prepared for it. As an investor, it’s not something you want to face, but the right financial planning can go a long way in helping.
We’ve compiled some useful tips that can help keep your investment strategies safe in the event of a volatile market.
Stick to Your Investment Strategy
A volatile market isn’t an excuse to chase new investment strategies. In fact, it’s one of the most detrimental things you can do for your portfolio. If you’ve put the proper amount of time and research into financial planning for your investments, a volatile market isn’t going to suddenly destroy everything you’ve built — generally speaking, of course.
This is why assessing the risk level of your portfolio is critical. You also need to make sure this process is done under your specifications. Someone else’s risk level might not match your own. If you find yourself suddenly uncomfortable with your time horizon, goals, and tolerance in a volatile market, then there’s a good chance it’s not the right investment mix for you.
Abandoning previous investment strategies and dumping stocks is not the best way to stay safe in a volatile market. If you happen to have a large stock position in your portfolio already, you should consider redirecting contributions into cash equivalents.
Cash is king in a volatile market for a couple of reasons. Number one, a portion of your portfolio will be safe during potential market downturns. Number two, it helps you build capital for when the market dips. If you increase your cash position, it will help increase stock holdings if the market declines as well.
This may not protect your entire portfolio, but it keeps certain aspects safe. It also allows you to remain active with stocks when the market is volatile.
Continue Investing Regularly
This may sound somewhat counterintuitive, but hear us out for a second. Investing regularly over a long period is one of the best remedies for market downturns. This is especially true when you consider the typically short-term nature of these dips.
Sticking to your personal investing schedule can save you from attempting to time the market — which is a big no-no. Guessing when the next market dip may come is useless. Instead, keep your original investment strategies intact and invest regularly. Once investment prices drop, those regular investments you’ve made may give you access to purchasing more shares and give you additional stability long-term.
If you’re looking for advice on how to navigate your investments during a volatile market, talk to a financial advisor. Our seasoned team of advisors will give you all the information you need and prepare you for different scenarios. Contact us today.