Investing in volatile markets Presented by Cody Kimble
lio hold many of the same
further financial loss. Mar-
securities?
kets typically go up and down, and even bear mar-
While every investor is
2. Determine your risk
different, periods of volatil-
profile
ity can be a wake-up call
Investing involves tak-
to make sure your portfolio
kets historically have been relatively short. According to the Schwab Center for
is adequately diversified
ing risks, and you have
Financial Research, the
based on your goals and
to be honest about how
longest bear market was a
risk tolerance. Investors who
much risk you’re willing
little less than three years
are focused on long-term
to take with your money.
(915 days), and it was fol-
goals shouldn’t let short-
Determining your risk
lowed by a nearly five-year
term movement sway their
tolerance informs how
bull run.
decisions, while investors
investments such as stocks,
who are nearing or in retire-
bonds and cash equiva-
ment may need to add de-
lents) is important because
fensive assets, such as cash
each can respond to the
or U.S. Treasury securities,
market differently. It’s not
for stability. It’s important
always the case, but when
to stay true to your financial
one is up, the other can
plan and make decisions
be down. Deciding on the
based on your goals and
right mix may help cushion
timetable, regardless of
the blow during volatile
market volatility.
markets. Here are a few quick questions to ask
Navigating through rocky markets can be tough,
yourself:
but following practiced investing principles might
• Does your portfolio’s suc-
help you stay the course.
cess depend too heavily on the performance of any
1. Diversify your portfolio
single investment? • Are your holdings especially concentrated on a
Portfolios that are highly concentrated in just
single industry, sector or
a few securities can be
country?
very risky. Having money
• Are you less diversified
spread across different
than you think because dif-
asset classes (or types of
ferent funds in your portfo-
10 JULY 2022
you should diversify your
Timing the market’s
investment portfolio be-
ups and downs is nearly
tween stocks, bonds and
impossible – instead, con-
cash equivalents. Higher
sider focusing on staying
potential rewards generally
diversified, know your risk
come from higher risks.
tolerance and stick to your
Start with some simple
plan during tough times.
questions:
For long-term investors, which are most of us, the
• Do you need your port-
strategy should be time in
folio to generate income
the market rather than tim-
now or in the near future?
ing the market.
• Can you tolerate fluctua-
So, remember to use
tions in the value of your
periods of market volatility
investments, financially
to make review your in-
and emotionally?
vestment for diversification and take your risk toler-
3. Take the long view
ance into account. And if
In times of dramatic
you don’t have a financial
market volatility, each fluc-
plan, now is a good time
tuation may seem disas-
to create one.
trous. However, emotional
Cody Kimble is a
reactions to short-term
Financial Consultant at
market conditions can po-
Charles Schwab with over
tentially put you at risk for
four years of experience
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