The wildly fluctuating stock market probably has you filled with anxiety. It’s important to keep your cool when investing in a down market. The wild ride we’ve all been experiencing may have you tempted to sell or make drastic changes to your investments, but it might not be the best time.
Never let emotions drive your decisions when it comes to investing, especially in a turbulent market. Fear can cloud your judgment. The worst thing you can do is make an impulse decision when sudden rises and sharp declines are the norms, like in today’s market environment.
Keep panic out of your investing decisions
When it comes to making investment decisions, as well as making other important decisions in life, it’s best to keep emotions out of the equation. While you may be worried about your portfolio and your financial health, try to keep your emotions in check and avoid making fear-based decisions during market swings. Most importantly, remain focused on the long term.
6 Tips for keeping your cool when investing in a down market
- Take a breath and remain calm. You can acknowledge your emotions, but don’t make any impulsive decisions. Emotional decision-making can lead to poor decisions that you may later regret.
- Review long-term trends. Remember when the stock market takes a dive, that it’s not the first time that it’s happened. Each time it has happened, the market went on to reach new highs.
- Consult with a financial expert. If you’re second-guessing yourself, speaking to an expert in the field can help. This might be the right time to establish a relationship with a trusted financial advisor. Professional guidance may help you lessen your anxieties about investing. If you have a professional helping, they will also help you to better understand and assess the risk level you are comfortable with both for your age and financial situation.
- Take advantage of market dips for some bargain shopping. If you’re a younger investor, the current market may give you an opportunity to buy a great stock at a lower price. Just be sure your decisions are well-thought-out.
- Think long-term and stick to your investing plan and as we mentioned above, don’t make decisions out of fear. Keep in mind that a market fall does not turn into a loss unless you sell your investments at the wrong time. If you’re an active investor, a trading discipline can help you stick to a long-term strategy.
- Finally, try not to look at the market every day. That may only worsen your anxiety when it comes to investing in a down market. Remaining invested, particularly through the current market volatility, is one of the best ways to weather the storm and ensure you reach your long-term investing goals.
Keep calm and don’t let the pressure get to you
Take your time when making investing decisions. Don’t let yourself be pressured. The financial markets are historically cyclical. While it’s scary to see volatility in the short term, it’s important to look at the long-term trends. If you sell your stock at a low, you guarantee yourself a loss. If you hold onto it, you have a good chance of being in on the upswing. Investing takes patience.
Keep your perspective. Downturns in the market are normal. Down markets may be a good time to meet with your financial advisor to review your risk tolerance, discuss adjusting your investment mix, or take advantage of bargain buying.
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