How To Protect Your Finances In Times Of Extreme Market Volatility
During times of extreme market volatility it is hard not to panic and assume the worse. Many investors begin to overreact out of fear and anxiety. Fluctuations in the market makes people nervous and afraid of what’s to come, and this sometimes leads them to act impulsively and make decisions that are not in their long term interests at the end. It is very important to know how to protect your finances in times of extreme market volatility and make decisions that make sense for your financial portfolio.
One of the key points financial professionals remark about reacting to market volatility is to “remember why you started investing in the first place” Changes in stock prices are not uncommon at all. Through trading, stocks rise and fall in value all the time so it is important to put these changes into perspective when understanding market volatility. Additionally, the ability for profit and the risk of loss increases with the volatility of the market. During these times, there is typically a significant rise in the number of trades. Sometimes depending on your investment strategy, these events could play out in your favor.
If you are more risk-adverse and decide that you can’t withstand the market volatility, consider investing in less volatile inclined assets. A great option could be to invest in a hybrid fund. Hybrid funds are designed to minimize risk volatility, and accommodate investors who are unable to tolerate ups and downs. They are seen as a more stable option than equity funds and yield greater returns. There are a variety of hybrid fund options available on the market that can offer you a peace of mind.
Many financial experts agree that the single best way to protect yourself during a volatile market is to diversify your assets and strategically invest as you were already doing. Having a wide mix of assets — stocks and bonds — across industries and asset classes will help with uncertainty. The truth of it all is that the ups and downs in the market are to be expected, and the general public can’t predict each valley and peak in their portfolio. However, you can equip yourself with the right tools and knowledge ahead of time to soften the blow. Preparing to brace for a volatile market will give you greater insight to why you shouldn’t pull out all together.
Perhaps the best way to really understand the market volatility and protect yourself is to speak with a licensed financial advisor at SJK Wealth Management. We understand that these are uncertain times for a lot of people because the immediate and long-term future of your assets are unknown. We have your best interest at heart and can help place you in the best financial position possible based on your situation.