The stock market can be volatile and will always go up and down. If your emotions run high during a volatile market, you’re not alone. The good news is you can take steps to help keep your feelings of fear and anxiety in check and avoid poor investment decisions based on emotions. Here’s a closer look at five ways to keep your emotions under control during periods of stock market volatility:
1. Focus on your goals
The foundation of your investment strategy should be based on your unique situation and portfolio’s goals. While some are short-term, others are long-term. Take a step back, think about your goals, and then determine if the current volatile market conditions require you to change your portfolio to meet them. You may find that staying the course and riding out the storm is suitable for now.
2. Don’t obsess over your portfolio’s performance
While it may be tempting to log in to your account every hour, on the hour, to check your portfolio’s performance, doing so can do more harm than good. If you check it too often, you may make decisions during downturns that you later regret. Do your best to limit the frequency you check your portfolio since it benefits your emotional and financial wellbeing.
3. Maintain an emergency fund
When in a volatile market, an emergency fund can help provide peace of mind. Be sure to have at least six months’ worth of living expenses in an account you can access at any time. If you don’t have easy access to cash, you may be more likely to make decisions based on emotions and fear instead of facts.
4. Keep the (stock market) faith
Financial advisory professional Nick Murray once said, “Investing is the age-old, never-ending emotional battle between fear of the future and faith in the future.” History has shown that the markets bounce back after dips, wars, recessions, and depressions. Therefore, calm down and remember that a market correction is temporary.
5. Talk to a financial professional during a volatile market
A financial professional understands how to manage the lows and highs of a volatile market. If you’re unsure what to do during a volatile market, reach out to a financial professional for advice to help you control your emotions and avoid rash decisions.
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