Investing in Volatile Markets

Periods of volatility can be a wake-up call for investors to make sure their portfolio is adequately diversified based on individual goals and risk tolerance. Navigating through rocky markets can be tough, but following practiced and proven investing principles might help you stay the course.  
1. Diversify your portfolio  
Portfolios that are highly concentrated in just a few securities can be very risky. Having money spread across different asset classes (or types of investments such as stocks, bonds and cash equivalents) is important because each can respond to the market differently. It’s not always the case, but when one is up, another can be down. Deciding on the right mix can help cushion the blow during volatile markets.  
2. Determine your risk profile  
Investing involves taking risks, and you should be honest about how much risk you’re willing to take with your money. Determining your risk tolerance informs how you should diversify your investment portfolio between stocks, bonds and cash equivalents. Higher potential rewards generally come from higher risks.  
3. Take the long view  
In times of dramatic market volatility, each fluctuation may seem disastrous. However, emotional reactions to short-term market conditions can put you at risk for further financial loss. Markets typically go up and down, and even bear markets historically have been relatively short. Timing the market’s ups and downs is nearly impossible – instead, focus on staying diversified, know your risk tolerance and stick to your plan during tough times. For long-term investors, which are most of us, the strategy should be time in the market rather than timing the market.  
Don Daigle is a financial consultant at the Charles Schwab branch in Millville. He has over 29 years of experience helping clients achieve their financial goals. Some content provided here has been compiled from previously published articles authored by various parties at Schwab.  
Investing involves risk including loss of principal. Diversification strategies do not ensure a profit and do not protect against losses in declining markets.  
The information here is for general informational purposes only and should not be considered an individualized recommendation or personalized investment advice. The type of securities and investment strategies mentioned may not be suitable for everyone. Each investor needs to review an investment strategy for his or her own particular situation before making any investment decision.  
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Don Daigle
Branch Leader
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