3 Money Experts Explain How They Remain Calm When The Market Fluctuates
If recent fluctuations in the stock market are keeping you up at night, you're not alone. Most of us get stressed when we check our investment or retirement accounts during times when the market is experiencing ups and downs.
But when it comes to investing, financial experts say your best bet is to think long term, keep investing and understand how the market works.
Here, three personal finance experts share their strategies for keeping calm and carrying on as an investor:
Plan for the Long Term
Chelsea Brennan, a former hedge fund manager and owner of the personal finance website, Smart Money Mamas, recommends taking the long view with the stock market.
"No one can predict market ups and downs," Brennan says. "Consistency wins over the long-term."
Under this strategy, a drop in your portfolio's value doesn't have to result in a "loss."
"If you don't sell and let your assets remain invested, over time markets recover and grow," says Brennan.
Those who may need to access their money sooner may want to review their strategy, however.
"If the declines are making you nervous, you might have too risky a portfolio," Brennan says. "Take a look at your asset allocation and consider rebalancing to a more conservative investment strategy."
If you find yourself checking your accounts a little too often, Brennan has a short-term fix.
"Personally, when I'm getting a little jittery about market fluctuations, I delete any investment apps off my phone and avoid checking balances for a while. I can't control it, so I won't worry about it."
Understand How the Market Works
Amanda Holden, owner of the Dumpster Dog Blog, worked in the investment industry in San Francisco during the 2008 economic crash and recession. Having seen rock bottom, Holden knows that when the market goes down, feelings of fear can go up.
Educating yourself about the fundamentals of the market can help during tough times.
"If someone is freaking out about the market, I generally start by reminding them that they own a fixed percentage of a company. That percentage does not change just because the value of the stock has temporarily changed; you own the same amount of company no matter the current price," Holden says.
"Why do stock prices go up and down? What causes volatility? On a day-to-day or even month-to-month basis, it is the buying and selling that causes prices to jigger around. This is old fashioned supply-and-demand at work."
Consider All Your Options
Kathy Kristof, author of Investing 101 and a columnist at Kiplinger, says every investor should have a contingency plan in case they need cash in the short-term.
If you can't tap your investment portfolio, you can consider options like borrowing from retirement funds, boosting your income through freelance work, consulting or a second job, and/or cutting your spending.
"Most people have a lot of options," Kristof says. "Remembering that can help you stay calm when those around you are in a panic."
All content provided in this blog is supplied by Kara Perez and is for informational purposes only. Barclays makes no representations as to the accuracy or completeness of any information contained in the blog or found by following any link within this blog.
Image Credit: iStock