It\u2019s a crazy world out there, and it all seems to be happening in real time. Four decades after CNN brought us 24-hour news, we now carry an endless supply of news and information in our pockets. We can see world events unfolding before our eyes, and watch moment-by-moment as they impact the economy and the stock market. Now \u2018doomscrolling\u2019 is part of our lexicon and it\u2019s become harder and harder to look away from all that\u2019s going on.<\/p>\n
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It\u2019s perfectly rational to worry about your investment portfolio when there\u2019s so much uncertainty. Events in the world can cause stocks to rise and fall, and the market can experience sudden dips, drops, or adjustments that result in concerning short-term losses in your investments. This can be gut-wrenching, and you may wonder if there\u2019s anything you can or should be doing about it.<\/p>\n
Of course you always want your investments to be heading in a positive direction. But if you want the kind of growth that a portfolio of stocks can give you over the long run, that comes with a certain amount of ups and downs. Unfortunately, when some people see the stock market dropping over multiple consecutive days, they want to move their money to a \u2018safer\u2019 location until the market recovers. This is usually an unwise decision.<\/p>\n
The problem is, nobody can really predict what the stock market is going to do in the short term. When fearful investors sell stocks as they\u2019re going down, they usually have a hard time knowing when it\u2019s best to buy back into the market. This can mean missing out on a market recovery while a portfolio is sitting on the sidelines. On top of that, liquidating a taxable portfolio can result in capital gains taxes \u2013 so it could cost you real money.<\/p>\n
It\u2019s human to want to take action when the world is rocked with unsettling news. When it comes to your investment portfolio, however, decades of evidence shows that steady discipline will provide the best results. If you\u2019re investing for the long term, some basic rules apply: Build a diversified portfolio, stick with it, and rebalance as needed.<\/p>\n
One thing you might want to do when the stock market is experiencing volatility is to check in with your own feelings. If you feel like your portfolio is well structured and you have enough information to know what to expect, then you should probably hang in there and trust that you\u2019re doing the right thing. On the other hand, if you\u2019re losing sleep or feeling sick to your stomach, it may be time to talk to your financial planner.<\/p>\n
Now, it\u2019s more than likely that your financial planner will discourage you from making sudden changes to your portfolio, but they\u2019ll want to make sure you\u2019re well informed about what to expect. And if necessary, they can help you rebalance your portfolio to make sure it suits your current needs and risk tolerance. Keep in mind that your needs will change over time as your financial situation changes and as you get closer to retirement. Some investors interpret \u2018hold steady\u2019 as advice to do nothing. While it\u2019s usually a bad idea to make sudden moves, that doesn\u2019t mean completely ignoring your portfolio. Annual reviews of your financial plan will keep you on course.<\/p>\n
Your Arrivity financial planner is your fiduciary partner, which means their job is to look out for your financial needs. If the news of the world is making you feel uncertain about your investments, it may be time to give them a call.<\/p>\n
Please contact us at 206.217.2583 or<\/p>\n