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Markets are unpredictable. They change like the weather, and just as sure as you’ll have sunny days, there will be rainy days in the forecast, too. But this is a good thing, because no matter how rough things get, the market will recover.
Ups and downs are part of investing, but what really counts is how you handle those downturns. Here are four tips to help you stay calm, stick to your investment plan, and ride volatile market changes out.
Instead of focusing on short-term gains, think of your investments as a garden that could bloom and flower over many years, even if it experiences a few not-so-ideal seasons along the way. If you pull out your investments in a panic prompted by a downturn, you might miss out on the big gains when the market recovers.
Investing is about maintaining an even, controlled pace for longer will be better for you than running at your investments head on.
Ups and downs are part of investing, but what really counts is how you handle those downturns. Here are four tips to help you stay calm, stick to your investment plan, and ride volatile market changes out.
1. Play the long game
Timing does matter, but maybe not in the way you expect. It’s less about when you jump into the market and more about how long you stay invested.Instead of focusing on short-term gains, think of your investments as a garden that could bloom and flower over many years, even if it experiences a few not-so-ideal seasons along the way. If you pull out your investments in a panic prompted by a downturn, you might miss out on the big gains when the market recovers.
Investing is about maintaining an even, controlled pace for longer will be better for you than running at your investments head on.
2. Consider dollar-cost averaging
If you ever find yourself obsessing over investing at the exact right time, dollar-cost averaging could help you stick to your plan.Let’s say you want to invest $5,000. Traditionally, you might wait for the market to be at its strongest and invest then. But dollar-cost averaging means you break that down into $1,000 chunks and invest those on the same day each month for the next 5 months.
What you will find is that sometimes you’ll buy when prices are high, and other times when prices are low. This averages out the costs overtime, thus the name. The idea is to invest a fixed amount of money on a regular basis—no matter what’s happening in the market. It takes a lot of the emotion and guesswork out of waiting for the perfect moment to invest.
3. Take stock of your risk tolerance
Different investments come with different levels of risk and reward. Take stocks, for example. They can offer great returns over time but can also be volatile. On the other hand, bonds are usually more stable but tend to give lower returns.This all factors into your bigger plan, which your financial advisor can help you map out. For instance, if you’re thinking about retiring soon, you might want to play it safer with your investments.
Diversifying your portfolio is a great way to build a low-risk portfolio. A well-diversified portfolio made up of a mix of investments—including stocks and bonds across industries and areas—can help balance out the risks when the market gets bumpy.
4. Keep your cool
If you’re starting to invest more, you’ve probably felt the ups and downs of the stock market firsthand—and it can be quite an emotional ride.Still, your best bet during market swings is to avoid getting thrown off-balance. It’s easy to feel like you need to react right away. But that can lead to panic selling when prices are low or even missing out on big gains when the market bounces back.
If you ever have doubts about your investments, we’ll walk you through them to help you navigate every twist and turn.
Navigating the ups & downs of the market
Market volatility is part of the game. When you invest with a long-term goal in mind, have a diverse portfolio, and know your risk tolerance, The best thing to do during a downturn is to stay the course and keep your eyes on the prize.The best investment strategy is one that makes you feel comfortable and confident. That’s where we come in. We can help create an investment plan that’s tailored to your goals, risk preferences, and timelines.
When you embark on your investment journey, having help on your side is important if you want to protect and grow your money. A trusted, accredited advisor can help you figure out a strategy that fits how much you want to invest and what kind of returns you can expect.
Mutual funds and other securities are offered through Aviso Wealth, a division of Aviso Financial Inc.
The information contained in this article was obtained from sources believed to be reliable; however, we cannot guarantee that it is accurate or complete. This article is provided as a general source of information and should not be considered personal investment advice or a solicitation to buy or sell any mutual funds and other securities.
NEI Investments is a registered trademark of Northwest & Ethical Investments L.P. (“NEI LP”). Northwest & Ethical Investments Inc. is the general partner of NEI LP and a wholly-owned subsidiary of Aviso Wealth Inc. (“Aviso”). Aviso is the sole limited partner of the NEI LP. Aviso is a wholly-owned subsidiary of Aviso Wealth LP, which in turn is owned 50% by Desjardins Financial Holding Inc. and 50% by a limited partnership owned by the five Provincial Credit Union Centrals and the CUMIS Group Limited.
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