Photo of Eric R. Ebbert, CFP®, MBA, CEO Eric R. Ebbert, CFP®, MBA, CEO Dec 08, 2020

Even when there is not a pandemic affecting the entire globe, the market is vulnerable to periods of volatility. This can happen because of housing market bubbles bursting, elections, wars and other major shifts that impact the economy. 

Periods of market volatility are usually short lived, but many people panic during these times and sabotage their investment strategies. Instead of panicking and selling your investments, you should rely on some simple preparation and patience to get you through periods of market volatility.

Preparing for periods of market volatility

The truth is, when the market is volatile, there is less to change in your investment strategy than there is in your own mentality. 

  1. Diversify your portfolio — Heavily stacking your portfolio with one type of investment can lead to disaster. For example, the dot-com crash of 2004 was caused by excessive speculation in internet websites. This was followed shortly by a housing market crash in 2008 because many investors shifted from websites to real estate.

    The lesson is to never put all your eggs in one basket. The basket can eventually collapse, and if all your eggs are in it, they are going to break.

    Diversify your portfolio with a spread of various short-term and long-term investments, so your wealth can continue to grow overall even if one area is struggling.
  2. Ignore the media panic — As soon as the market starts looking unstable, it will make headlines of nearly every publication out there. Keep in mind that the media gets attention and money by selling disasters. As a savvy investor, you should not be so quick to panic because the media blew something out of proportion. Stick to the advice of financial professionals, like the CERTIFIED FINANCIAL PLANNER™ professionals at ProVise Management Group.
  3. Relax and wait — While it might be wise to make some small shifts in your portfolio during a period of volatility, overall it is usually a smart decision to simply wait for the period to pass. Your long-term investments will likely still be fine, and your short-term investments may rebound and continue on their period of growth after the period of volatility passes.

Talk to a ProVise CFP® professional about managing your finances

Managing all your investments on your own is like trying to headline a juggling act. Managing your investments during a period of volatility is like headlining a juggling act while walking a tightrope. Managing them during a pandemic, they might as well be on fire too.

Fortunately for investors like you, our CERTIFIED FINANCIAL PLANNER™ professionals at ProVise Management Group can headline your juggling act and help you get your investments through the good times and the bad.

Our team can get to know you and your current financial circumstances, goals, risk tolerance and personal values to help you develop a plan that works for you. We can also create a written plan for you at a fiduciary standard of care. All our written plans come with an unconditional money-back guarantee. If you are unhappy with your written plan, you can return it to us, and we will refund 100% of the fee paid.

Are you ready to talk to a professional about managing your investments and personal finances? Contact ProVise today to schedule a complimentary consultation.