When markets get rocky, it’s tempting to take action. But that may only disrupt your long-term goals. Here are some things you may want to consider during times of market volatility.
Don’t veer off course: Not keeping all your eggs in one basket generally helps manage risk by spreading your savings or funds across different asset classes within your portfolio. 1 Even when markets are down and one investment is performing poorly, another could be performing better. Resist the urge to try to “time” the market by readjusting your portfolio based on market conditions alone—and ask a professional for help if you think you’re having trouble being objective.
Keep your eye on the horizon: Building a solid financial plan that takes goals into account, like paying off your mortgage, saving for college, and living in retirement, can help you stay level-headed when the markets are most volatile. Also, as tempting as it might be, don’t look! Checking your investment balance every day may add to your anxiety and takes the focus away from your long-term goals.
Don’t forget to fill your piggy bank: Having about six months’ worth of living expenses saved in an account that’s easy to access could also increase your financial confidence when markets are unsteady. A financial advisor can help you determine what steps to take to meet your income needs while not disrupting your long-term investments—and make sure your portfolio is diversified as well.
Explore “market proof” investments: There are savings products, including some types of bank certificates of deposit and annuities that are not affected by market volatility. You may want to consider them as a way to safeguard a portion of your savings and diversify your retirement portfolio. With the TIAA Traditional fixed annuity*, for example, your principal is protected and your balance is guaranteed to grow every day as well. And when you retire, you can choose to get guaranteed monthly income payments 2 that will never run out.
*Issued by Teachers Insurance and Annuity Association of America (TIAA)