Navigating Market Uncertainty

For some, the highs and lows of stock market volatility may result in short-sighted, panic-based reactions with long-term negative consequences. For others, they realize it’s just another bump in the road on their investment journey. How you respond during these times will be based on where you are in your investing journey.

Investors with many years to go before their planned retirement have more room to tune out the current market’s ups and downs. Those who are either already retired or nearing retirement, however, might need to reexamine and re-calibrate their portfolio. Because Travis Credit Union cares about your financial wellness, we’ll explore how to plan for the only market certainty that is constant: uncertainty.

Know Your Tolerance Level

Yes, gas prices in the U.S. skyrocketed in March 2022, returned to more normal levels, and then started to creep back up recently. There’s a war in Europe and we’ve passed the second year of the global COVID-19 pandemic. These issues alone may make you uncomfortable about the stability of your investments. The key to not hitting the panic button is to remain calm and understand your risk tolerance.

Know how much of a fluctuation in the stock market you can accept during any given period. This helps you confidently stay on-course as well as avoid any impulsive decisions that may be rooted in anxiety or fear- especially in a volatile market.

Play the Long Game

Another tip is to focus on the long game or your long-term goals. Do this by moving away from a month-to-month portfolio review and into a year-to-year (or longer) review strategy. Staying invested during market fluctuations is not only part of a well-rounded approach to investing but it may provide an opportunity to invest when stock prices are low.

A good rule of thumb is to aim for a diversified portfolio that includes individual stocks, mutual funds, bonds, real estate, etc. This helps you maintain balance when one sector experiences wild swings. It also reduces the likelihood of all your investments suffering losses at the same time.

Be Prepared for Setbacks

Even with a diversified portfolio, be prepared for market volatility, especially if you’re retired or close to retirement. Market dips typically go hand-in-hand with other types of economic setbacks so, no matter which stage of life you’re in, you’ll want to ensure your emergency fund can cover setbacks.

Another way to be prepared financially for market risk is to have insurance coverage that helps protect against risks that could lead to financial hardship. These include health insurance, homeowner’s or renter’s insurance, auto insurance and disability insurance.

While younger investors have more time to overcome any losses they might encounter in the stock market, older investors might need to re-evaluate their withdrawal rates, asset allocations and more.

Seek Expert Advice

Consider consulting with a financial professional who can provide more context and alternative viewpoints to help you reevaluate your investments and create an investment strategy that works for you. Money you invest in the stock market should be money that you don’t need in the short-term. Try to adopt a “set it and forget it” mentality.

Travis Credit Union cares about your financial wellness and offers a wealth of information and services to help you. Visit our Financial Planning page to get started. View our Financial Wellness Blog for a variety of money-related topics.

And check out our Smart Money Matters e-newsletter for important member information, current events and more!