What to do – and what not to do – when markets get shaky

If ups and downs in financial markets have you second guessing your investment strategy or wondering if you should move all your assets to less risky territory, take a deep breath. Here are tips to help you get through market volatility and stay on course toward goals.

Diversify

To manage risk, make sure your portfolio is spread out among a good variety of investments. Generally, stocks and tangible assets like agriculture and real estate have historically offered growth over the long term and involve some risk. Other investments, including bonds, have offered lower returns but can add a degree of stability to your portfolio.

Rebalance periodically

At least once a year, take a fresh look at your portfolio to make sure your asset allocation remains in sync with your goals, the time available to achieve them, your objectives for return, and your tolerance for risk. Over time, market swings can throw your asset allocation out of balance. When this happens, you can rebalance by moving money between investments to get back to the asset allocation you want.
Also revisit your asset allocation whenever your life changes – for example, if you get a raise, get married, have a baby or go through a divorce. You might decide to take either less or more risk with your investments.1

Don’t try timing the market

Market timing is when you move your money in and out of investments to try and capture the performance highs and avoid the lows. Even the most experienced investors get tripped up by market timing. Avoid doing it.
If, for example, you sell stocks when they’re down, you may lose out on gains if prices go up again. Historically, the stock market has generally recovered from slumps, over the long term although past performance is no guarantee of future results.

Stay focused on the long term

Don’t make investment decisions based on emotion, and don’t let short-term volatility make you lose sight of long-term goals. Having a well-thought-out financial plan can help you stay on course during instability. Your plan should provide a roadmap for achieving a range of needs and goals – from paying rent or a mortgage, to saving for college, to investing for retirement – during both up and down markets.

Have a rainy-day fund on hand

Always keep tabs on how much cash you have on hand for emergencies. Having enough of a rainy-day fund can help ensure you won’t have to sell long-term investments during downswings. Try to have enough money set aside to cover at least six months of living expenses. Keep the cash in a place where it will be relatively safe and easy to get to quickly, like a money market account at a bank.

Talk with your TIAA advisor

Your TIAA advisor can evaluate whether your portfolio is built to weather market storms – or if it needs shoring up so it can continue meeting your objectives.2
C26913