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Money On Your Mind: Volatility Checklist

BernsteinWhen markets are moving rapidly up and down, you may feel torn between jumping ship or trying to hibernate. Selling out is usually tricky and sometimes disastrous. So what else can one do besides putting on blinders? Here are four pro-active moves to take when your portfolio is making you nervous:

  • Understand what you own – Do you understand what types of stocks and bonds you own? Going through your holdings can help you realize the level of diversification you have. If you see that your portfolio is well thought out, with complimentary parts and appropriate risks given your time horizon and goals, that can be reassuring. If you find that you are overly concentrated in certain investments, you can go ahead and address that thoughtfully.
  • Ramp up your savings – Now is a great time to make sure you are using your money wisely. You may be able to generate new savings by refinancing your mortgage, switching cable companies, shopping for energy providers, finding a better health plan or simply putting away a set amount monthly. Even a modest sum, consistently invested, can turn out to be significant over the long term. If you are not saving every month, pick a dollar amount – no matter how small – and set up an automatic draw to an investment account.
  • Simplify your financial life – One effective way to deal with uncertainty is to make it easier to keep track of your accounts. Do you have miscellaneous money floating around – perhaps an old workplace plan or a brokerage account with a small balance? Consider consolidating these into your main set of accounts. Old savings bonds, stock certificates or that drawer full of change could all add up and be put to better uses. By decluttering your finances and eliminating unnecessary accounts, you can better analyze your financial position and maybe even speed up your tax filing.
  • Talk to someone you trust – This can be your financial advisor or a friend or relative with investment experience and knowledge. What do they suggest doing? Simply looking for advice online may lead you to information overload. Try speaking about your fears. You may find that just articulating your thoughts and concerns makes you feel better and more confident about the road ahead.

While times of volatility can be upsetting, managing one’s financial life reasonably and systematically can lead to much better outcomes than knee-jerk reactions or a neglectful approach.

Investment Advisory Team

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