Market Volatility Is Not as Spooky as it Sounds

Charlie Smith in Market Outlook 30 October, 2018

Even though Halloween is right around the corner, investors shouldn’t let the market spook them. When the market is on a slight downturn, it’s common for some investors to become nervous or scared. However, these ebbs and flows are the nature of the market and it’s crucial for investors to not let the bumps along the way distract them from their savings goals.

When it comes to investing in the stock market, there are a few things that investors should keep in mind if market volatility begins to make them worry.

  • The market is always going to fluctuate. Even though most individuals are aware that they’re putting their money at risk when they invest, Fort Pitt advocates that investors make a collection of companies that work for them. Over a long period of time, this collection of companies should be able to outperform what interest you would earn from simply putting money into a savings account. We say this because you’re taking more risk and thus you should earn a higher reward.
  • There’s no reason to be nervous when approaching an advisor about a dip in the market.  When the market is down, investors should talk to their advisor about the investments being made in their portfolio and seek reassurance. However, prior to approaching their advisor, investors should ask themselves what the fundamental reason is for them to be nervous. If the fluctuation is caused by anything outside of total economic collapse or society is going in the way of Mad Max, they’re most likely going to be okay.
  • There’s no such thing as a recession proof portfolio. To help protect investors, our goal is to invest in a bucket of stocks that don’t go down quite as fast as others. Unless funds are needed in the immediate future, investors shouldn’t care if the market goes down because the market never stays the same and investments have to ride the waves of the market.
  • Retirees should be prepared ahead of a recession. Although history has shown that recessions don’t last forever, it’s crucial for retirees to have enough money set aside so they aren’t forced to sell a good asset at a bad price just because they need money.
  • Don’t play into the fear of the media. It’s common that the market will fluctuate as news develops. However, politics and midterm elections will most likely not cause a market crash. The market will always fluctuate, but that doesn’t signal the end of your investments.

It’s normal for investors to become worried during a tumultuous market. But it’s important to not let these worries distract you from your financial goals. Financial advisors are here to help keep you on track and educate you on your way to financial success.

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