It is hard to miss the headlines from the last couple of days. The stock market is down and it is all across the news with terror inspiring headlines.
These headlines and all the talk that goes with them can inspire worry and second-guessing but it shouldn’t. When you see the headlines market drop think – sale!
Ups and downs are part of investing. Historically corrections of up to 5% happen once or twice a year while markets are rising. Last year was an anomaly and we didn’t experience much volatility.
This is the risk side that balances the reward of the markets going up. While initially you might only be able to see how much you lost it is actually an opportunity.
How to make the most of market turmoil
- Buy. As long as you are investing for the long run this is just a blip in the road and an opportunity to buy 10% more!!
- Assess how you feel. This is the first real test in years of how risk sensitive you are as an investor. Does the recent downturn have you thinking ‘sell it all’? If so you might want to consider a less risky portfolio or setting up automatic investing so that you don’t worry about market changes. If even that seems like to much it might be time to consider an advisor (human or robot) who will continue to execute your strategy while you are nervous
- Stick to the plan. If you invest in equities (stocks and index funds, ETS, and mutual funds based on stocks) you should be in the market for the long run (5+ years). Do not let a small set back change your strategy.