Watching the markets and exchange traded funds (ETFs) climb and fall so quickly these last few weeks could give almost any investor motion sickness. However, Laura Rowley for Yahoo! Finance offers five tricks to try that might cure the queasiness:
- Be True to Your Goals
Ensure your portfolio reflects your financial aspirations. A diversified portfolio will swing in value, which is a natural reflection of the economic cycle. Don’t let the down times scare you. Sticking to your individual investment strategy is the best defense against market volatility.
- Be Realistic
Keep your financial goals concrete, precise and measurable.
- Be Patient
Look at your time frame, the more time you have until you need the investment (such as retirement), the more you can probably handle the market ups and downs. If the time frame is short, then rethink your risk tolerance. Markets can go up and they can do down, be patient with them.
- Be Introspective
If you do loose a lot of money during a market downturn, it’s a good opportunity to reassess your portfolio and your risk level. Studies on loss aversion have found that investors tend to feel the pain of losses more than the joy of gains. Whatever your investment strategy is, re-examine it once a year to ensure it’s in sync with your goals.
- Get Help
If you don’t know what your risk level is or if your investments reflect your goals, don’t be afraid to ask.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.