Emotional decisions during periods of short-term volatility rarely pay off in the long run.
- Investors often make the mistake of trying to time the market by simply selling out of it. Historically, some of the worst short-term market fluctuations and losses were followed by periods of substantial market recovery.
- In a volatile market, it’s tempting to move to a “safe” asset like cash. For many of us, the prospect of loss drives our decision-making. But in many cases, the better approach is to build a resilient strategic portfolio that can help manage risks on the downside.
- Consider your goals, time horizon, risk tolerance and overall financial situation when making an investment or asset allocation decision. A significant reallocation because of short-term uncertainty rarely pays off in the long term.