3 Things to Remember When the Stock Market Dips


 

When the stock market fluctuates, it’s common to feel unsettled. However, the best course of action is generally to stay calm, cool and collected in the face of short-term market events and volatility.

Review the following reminders to feel more confident and avoid unnecessary stress that could hurt your health or your portfolio. The bottom line is to stay focused on your goals and the big picture.

During market dips stay calm and stay focused on your goals.

1. Remember that you’re investing for the long term.
Unless you’re close to retirement, saving for your golden years is a decades-long journey. Especially during downturns when you see your portfolio numbers dip, it’s important to keep your investments in place, stick to your long-term strategy and avoid making decisions based on day-to-day volatility.

The stock market is still one of your best options for achieving long-term asset growth. You might even think about a down market as an opportune time to buy stocks “on sale” before the market picks back up again.

2. Focus on what you can control.
Don’t try to time the stock market. It’s hard to predict what will happen, and investors who jump ship can miss out on future growth opportunities. You’ll likely find it stressful and unproductive to try to predict stock market fluctuations.

Instead, manage your investments with an eye on portfolio diversification and risk tolerance. Choose your ratio of stocks and bonds based on your goals, time frame and comfort with risk. This way, you can feel better prepared for any event that might come along.

3. Maintain your overall financial health.
Don’t lose sight of your total financial picture when you’re focused on investments. Assess your family’s financial situation on an annual or semiannual basis, and consider asking a financial advisor for guidance. Areas to review might include  emergency savings, credit scores, debt management, college savings accounts and estate planning.  

At a minimum, you should have an emergency savings account. In the event of a job loss or another financial hardship, having emergency cash on hand can help you be more resilient, avoid high-rate debt and stay financially well.

 

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