After last year’s historically low volatility, its resurgence in 2018 has been hard for investors to stomach. In fact, a recent Allianz Life study found that 37% of investors are anxious about the recent volatility. (1) Are you one of them?
Especially with the October that we just had, it’s understandable for you to be nervous about your investments right now. But you need to be careful because with investing, fear leads to costly mistakes. It’s important not to give in to the knots in your stomach, but to keep a level head. Here is how to get through this year’s (or any year’s) volatility without losing your cool.
Keep A Long-Term Perspective
The market might be down tomorrow and it might be down a month from now. But if you needed your money tomorrow or a month from now, you wouldn’t have invested it in the stock market. Stock market investing is for the long term, so you shouldn’t let short-term volatility scare you.
History shows us that about every four years the markets post negative annual returns. In spite of that, the S&P 500 Index has averaged gains of 11.69% from 1973 to 2016. (2) So, while things may be down for the moment, history shows us that if you wait a couple of years, the gains will far outweigh any losses you have experienced.
Tune Out The Noise
In today’s digital world, we have 24/7 access to news media outlets, and there are a lot of them. With so many different voices fighting for our attention, headlines are getting more and more alarmist. We are constantly bombarded with articles and videos telling us what we need to do based on the last hour’s market performance.
The truth is, volatility and market drops only hurt investors if they sell when the market is down and lock in those losses. The best thing for you to do is tune out all of the noise and, as we said above, keep a long-term perspective.
Trust Your Portfolio
Markets go up and down, and investment professionals understand the movements and prepare for them. If you’re a client of ours, then we designed your portfolio with this in mind. We knew it would happen and you are ready for it.
Just because the Dow Jones Industrial Average is bouncing all over the place doesn’t mean that your portfolio is. Your portfolio is comprised of not just stocks but also bonds and other assets as well. They are designed to work together and balance each other out so that you won’t experience the wild ride that other investors experience. We custom-design every portfolio with your specific time horizon and investment goals in mind, and you can trust that it will achieve its goals regardless of what the markets do today or tomorrow.
Talk To Your Advisor
If you’re experiencing anxiety, talk to your advisor. We are here for you. We understand how nerve-wracking market volatility can be, and we want to help calm your emotions with an objective review of your portfolio and how current events fit into an overall historical perspective.
If you aren't working with us yet, give us a call at (515) 226-0115 or email us at firstname.lastname@example.org a complimentary portfolio review where we will discuss your concerns.
Terry Garland is the founder and CEO of Golden Capital Management with more than 25 years of industry experience. He works with individuals, small-to-medium-sized businesses, and medical professionals, including physicians and dentists, allowing them access to a wide variety of specialized services and investment vehicles to fit their specific needs. He graduated from Drake University and attended the Wharton School at the University of Pennsylvania and is a certified wealth strategist and a registered principal. With offices in Des Moines, Iowa, and Carlsbad, California, he serves clients across the country. Learn more by connecting with Terry on LinkedIn.