3 ways to deal with stock market volatility


JAlthough stock market volatility is nothing new, it can still be difficult for investors to manage. And to say that the start of 2022 has been volatile would probably be an understatement.

But while the market has been intense for the past few weeks, the good news is that things should calm down eventually. In the meantime, here are some ways to ride out the storm.

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1. Withdraw money from the market that you may need in the short term

As a general rule, it’s not a good idea to invest the money you think you’ll need within five years. And you definitely shouldn’t invest your emergency fund in stocks, because you could end up locking in losses if or when you need that cash at a moment’s notice.

But you may have cash earmarked for relatively short-term equity goals, like the down payment you’re trying to save for a house. This is money that really shouldn’t be in stocks in general, and certainly not right now.

2. Not checking your wallet balance daily

Depending on your specific balance and holdings, you could see your portfolio value drop by $10,000, $20,000, or more overnight during this volatile period. That’s enough to drive even a seasoned investor to the point of panic.

It is for this reason that you should avoid checking your wallet balance every day during difficult times like the one we are going through. This could lead you to rash decisions, such as selling investments rather than waiting and avoiding losses.

If you really must check your wallet balance frequently, limit yourself to once a week. But if you’re not planning to tap into your portfolio anytime soon – say, your investments are all for retirement savings and you plan to work another 15 years – then why bother?

3. Make sure you’re well diversified

A diversified portfolio could make it easier to weather periods of market volatility, so the only scenario where it Is it that Paying to check your portfolio is all about making sure your assets are spread across different segments of the market. If you see that you are overloaded in a single segment, you will know how to change things.

You can also diversify your holdings by investing in exchange-traded funds (ETFs) on a broad market. These allow you to own a bunch of different companies with just one investment. For example, if you buy S&P500 ETFs, they will effectively give you exposure to the 500 largest publicly traded companies.

Another good way to diversify your portfolio is to look at REITs or real estate investment trusts. REITs are known to pay above-average dividends, which means they can be a great source of income. REITs don’t always rise and fall in value in direct correlation to stock market movements, so they could offer you some protection when things get risky.

Stock market turbulence is something many investors struggle with. If the past few weeks have left you unsettled, know that you are not alone. At the same time, take these important steps to help you get through this difficult time without harm.

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