Market fluctuations are a natural part of investing. Despite the unpredictability of future market behavior, historical trends in the U.S. show that downturns eventually lead to recoveries. Financial behaviorist Jacquette M. Timmons, who holds an MBA and specializes in helping clients navigate monetary challenges, offers valuable advice on maintaining your composure during market turbulence.
Identifying the Root of Your Financial Anxiety
To begin calming your nerves, Timmons recommends introspection through targeted questions:
“Consider the long-term objectives behind your investments. What are these goals? Is there a fear of not having sufficient funds to meet specific needs? What are these needs?”
If your aim is short-term savings rather than long-term growth, Timmons advises diversification and maintaining liquid assets in savings and emergency accounts to cover immediate expenses.
Understanding that your investment strategy is designed for the long term can help you see market instability as a temporary hurdle, not a disaster. Historically, markets have not only recovered but have also shown an upward trajectory over time.
“Focus on your investment goals and their timelines. If your horizon is long-term, consider market dips as buying opportunities,” suggests Timmons.
She also encourages reflecting on whether your anxiety stems from others’ fears or from your own observations. Sometimes, reducing exposure to constant news updates can mitigate undue stress.
Balancing Information Intake and Emotional Health
While staying informed is crucial, Timmons emphasizes the importance of not getting overwhelmed by every headline. “Approach news consumption with detachment,” she advises.
Limiting how often you check your portfolio—experts recommend quarterly reviews—can prevent emotional decisions driven by short-term market movements.
Implementing a Cooling-Off Period Before Acting
In times of market volatility, the impulse to withdraw investments can be strong. However, Timmons cautions against hasty decisions that could lead to missed opportunities during recoveries.
“Before making significant decisions, pause for 24 hours. If the urge to act remains strong, proceed cautiously; if not, consider extending the waiting period,” she suggests.
This reflection helps separate immediate reactions from thoughtful decisions, allowing emotions to settle before making impactful financial choices.
Conclusion
By understanding the source of your uneasiness, managing how you consume information, and instituting a waiting period before making decisions, you can navigate market volatility more effectively. Remember, emotional responses to market changes are natural, but they shouldn’t dictate your investment strategy.
