Article provided by Fidelity Investments
Fidelity discusses 5 major tips to help investors navigate volatile markets
1. Keep perspective: Downturns are normal
Historically, US stocks have experienced 3 downturns of 5% per year, 1 correction of 10% per year, and 1 correction of ~15% every 3 years.
But while market downturns may be unsettling, history shows stocks have recovered and delivered long-term gains.
Despite market pullbacks, stocks have risen over the long term
2. Get a plan you can live with – through market ups and downs
Your mix of stocks, bonds, and short-term investments will determine your potential returns, but also the likely swings in your portfolio.
Pick an investment mix that aligns with your goals, timeframe, and financial situation, and you can stick with despite market volatility.
Choose an investment mix you are comfortable with
3. Focus on time in the market – not trying to time the market
It can be tempting to try to sell out of stocks to avoid downturns, but it’s hard to time it right.
If you sell and are still on the sidelines during a recovery, it can be difficult to catch up. Missing even a few of the best days in the market can significantly undermine your performance.
Stock returns represented by the S&P 500® index from January 1,1980–December 31, 2022. Past performance is not a guarantee of future results. Source: Fidelity, Asset Allocation Research Team, Bloomberg as of 12/31/22. Updated analysis will be forthcoming in the second quarter of 2024. The hypothetical example assumes an investment that tracks the returns of the S&P 500® Index and includes dividend reinvestment but does not reflect the impact of taxes, which would lower these figures. “Best days” were determined by using the one-day total returns for the S&P 500® Index within this time period and ranking them from highest to lowest. There is volatility in the market and a sale at any point in time could result in a gain or loss. Your own investment experience will differ, including the possibility of losing money. It is not possible to invest directly in an index. All indexes are unmanaged.
4. Invest consistently, even in bad times
Some of the best times to buy stocks have been when things seemed the worst.
Consistent investing can give you the discipline to buy stocks when they are at their cheapest.
Consider setting a plan for automatic investments
Investing during recessions has historically led to strong investment results
For illustrative purposes only. Recession dates from the National Bureau of Economic Research (NBER). Past performance is no guarantee of future results. It is not possible to invest directly in an index. All indexes are unmanaged. See footnote 4 for index information. S&P 500 index monthly total returns from 12/31/49 to 12/31/19. Source: Bloomberg Finance, L.P.
5. Get help to make the most of a down market
While no one likes to lose money, your financial advisor may be able to help you take advantage of a down market.
Tax rules may let you use losses on some of your investments to reduce your future tax bills.
Down markets may also be a good time to meet with your advisor to discuss adjusting your investment mix, or taking advantage of opportunities when prices are low.
When markets are volatile and you experience down days, what's your first reaction?
Great! Now is the time to buy
This makes me uneasy
I want to pause investing more until the markets go back up
I want to sell
We can help you navigate these markets! Contact us today using the link below
Article provided by Fidelity Investments
The comments contained herein are a general discussion of certain issues intended as general information only and should not be relied upon as tax or legal advice. Please obtain independent professional advice, in the context of your particular circumstances. This blog was prepared by Alison Cannell, for the benefit of Alison Cannell, Financial Advisor with Cannell Wealth Management Inc., a registered trade name with Investia Financial Services Inc., and does not necessarily reflect the opinion of Investia Financial Services Inc. The information contained in this blog comes from sources we believe reliable, but we cannot guarantee its accuracy or reliability.
The opinions expressed are based on an analysis and interpretation dating from the date of publication and are subject to change without notice. Furthermore, they do not constitute an offer or solicitation to buy or sell any securities. Mutual Funds are offered through Investia Financial Services Inc. Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the Fund Fact sheet or prospectus before investing. Mutual funds are not guaranteed, their values change frequently, and past performance may not be repeated.
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