Shook up by market volatility?

The market may fluctuate but focusing on things you can control will help you resist the urge to react on impulse.

Don’t panic. The ups and downs of the stock market aren’t as unusual as they may seem.

Overhead close up of a young woman working on laptop

The market can be volatile and that makes trying to time the market very risky. Research and history shows that you’re betting against the odds when attempting to accurately time when to get in and out. It’s similar to a gambler that feels he has somehow figured out how to “beat the house”. For market timing to pay off, an investor has to correctly predict when the market will go up AND when it will go down – or vice versa. If you’re wrong about the timing of one of these events, you could lose. Even the best day-traders see very mixed results. Are you really willing to gamble with your retirement funds?

In contrast, you may be tempted to sell off your assets after watching the market go down one day, then up the next. Resisting the urge to react to volatility, however, may allow you to benefit when it recovers. Instead, consider worrying more about the factors you can control, like how much you are saving. And consider putting more of your attention toward constructing a portfolio that reflects your risk tolerance and your long term retirement planning strategy.

Understanding the market cycle may be a key factor to getting the most out of your investment goals. Disciplined investing* and managing your reaction to a bad market day or week could be the best hand you can play. Systematic investing does not ensure a profit nor guarantee against loss. Investors should consider their financial ability to continue their purchases through periods of low price levels.

Saving for retirement is a marathon, not a sprint. Stick to your plan and stay invested.

*While using diversification and asset allocation as part of your investment strategy neither assures nor guarantees better performance and cannot protect against loss in declining markets, it is a well-recognized risk management strategy.