Stock Market Volatility is Increasing – 4 Things You Should Do Now

Yesterday, the Dow Jones Industrial Average plunged 400 points: that’s the kind of volatility you can expect this close to a presidential election, especially after stocks have experienced nearly unprecedented growth for the last two years.

Whether it’s up, down or sideways, here’s some Wall Street Wisdom you can use, no matter the market.

What to Do When the Stock Market Tanks

In cases like yesterdays, it may feel like your entire investments are a wash. However, here are some actions you can take to limit the damage in the event of a stock market downturn.

Keep a Cool Head

First things first, take a deep breath. A single day’s poor market performance should rarely (if ever) be cause for panic.

Overall trends are important, but stocks tend to experience their share of ups and downs. So don’t jump the gun.

Have an Emergency Fund

You’re much less likely to panic about a day of market losses if you have an emergency fund in place.

Generally speaking, you’ll want to have several months’ worth of expenses stored in an easily accessible savings account.

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Ignore the short-term

If your original plan was to keep your investments where they are for a few decades, that should still be the plan after a market decline.

Too many people react to market declines by panicking and pulling the trigger. If you sell when the market drops and your stocks are losing, you’ll only be locking in your losses. Not to mention, forgoing the opportunity to earn future profits.

Reassess Your Investment Strategy

As a rule of thumb, you want to buy low and sell high. But never try to time the market.

If you find yourself making mistakes, especially over long periods of time, don’t give up. Instead get help. 

You don’t have to go it alone, and for many, it’s not productive.

Consider this: A Vanguard study found that, on average, a hypothetical $500,000 investment over 25 years would grow to $1.7 million if you manage it yourself, but more than $3.4 million if you work with a financial advisor. That’s twice as much!

If you’ve got at least $100,000 in investments, check out a free service called SmartAsset. You fill out a short questionnaire and instantly get matched with up to three vetted financial advisors in your area, all legally bound to work in your best interests. Get a free appointment. Talk to a pro. Nothing wrong with a second set of eyes.