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5 Tips to Remember During a Volatile Market
By Ameriprise Financial Published: 12/06/2008
The key is to understand how to react and what your mindset should be when there is significant market uncertainty.
Here are five things to think about when the markets take a turn:
Review your financial plan.
An optimal financial plan takes into consideration a lot more than asset allocation. Elements such as cash management, protection management and retirement planning are also key pieces to a holistic plan. Overlooking any of these elements can put your dreams and goals at risk. Now is the time to meet with your advisor to find out how market volatility is affecting your plan and to determine if you need to make adjustments.
Don't let emotions affect your financial future.
Up and down market movement is a fact of life. Don't let your emotions drive your decisions. Stay focused on your long-term investment objectives to help ensure your plans stay on track.
Diversify, diversify, diversify!
Diversified investing across stock, bond and cash investments can help smooth out the inherent ups and downs in the market. Your Ameriprise financial advisor can help you determine the appropriate investment mix depending on your goals, risk tolerance and time horizon.
Be disciplined.
Disciplined investment strategies such as dollar-cost averaging can help smooth out market fluctuations. Dollar-cost averaging is the practice of investing fixed amounts in equities at set periods of time. Over time, your average price per share will usually be reduced, and may help put you in a better position to weather a volatile market.
Avoid market timing.
It can be tempting to react to market volatility by trying to time the market. But effectively timing the market requires you to make two correct decisions that are very difficult to make: exactly when to buy and exactly when to sell. This is a risky game to play. Being out of the market at the wrong time — even if it's for a short period, can significantly cost you.
Our collaborative Dream > Plan > Track > financial planning process is built with a long-term view focused on your unique dreams and plans. Your financial advisor can help determine if you need to make adjustments based on current market conditions.
If you don't have an advisor, now is a great time to start the conversation with an Ameriprise financial advisor.
Ameriprise Enterprise
