5 Tips To Stay Calm During A Market Downturn

Is there another recession coming up? Will it impact your financial goals and investments? Do you panic as an investor when the stock market swings up and down? Does the blaring news of the economy slowing down scare you?

You might come across alarming headlines about a market downturn whenever you scroll through news and social media feeds. Of course, it can be a very unsettling experience to read ominous headlines about a sluggish economy, impending recessions, and rising interest rates.

But we are here to remind you about the benefits of staying calm and composed during times like this. That way, you can weather the storm and come out of the other side of the tunnel thriving.

Although there is no way to know or predict the investment market volatility or how long this phase is going to last, there are some things you can do to remain calm and carry on.

For instance, you can get in touch with some of the best Maryland financial planners to understand the market cycles, upward and downward trends, and ways to create investment opportunities even in distressing times.

5 Tips To Quell Your Fears About A Market Downturn

Stay invested: Don’t let your emotions get the better of you. There is no reason to abandon your sound investment strategy during a market downturn, as it is the costliest mistake investors make during a bad market.

There is no reason to “jump ship” or panic-sell at a loss during a downturn hoping to buy back at the bottom. There is no way to find out the actual “rock bottom” of a bad market as there are many false signals known as “Bull traps” resulting from a volatile and unpredictable market.

Buying back the same financial plans in the future can significantly impact your returns. Hence you should stay invested and learn to recognize the warning signs. Meanwhile, you can contribute more capital or re-balance your portfolio by getting in touch with an expert.

Stop timing the market: Don’t get into the vicious cycle of monitoring the market’s highs and lows constantly. Getting in or out of the investment market during particular times can backfire, as it is impossible to maintain a successful timeline.

So it is best to avoid impulsive moves as the market moves in cycles. So prepare for a better recovery after the downturn by remaining invested.

Revisit the goals and risk tolerance: One can easily forget about the uncomfortable situation of a bear market during a bull market. Especially about the financial assets that are fulfilling short-term goals.

Hence you should dial back risks if you can’t withstand market volatility, especially when looking into short-term investments. Consider more conservative asset allocations if you want to tap into your investments sooner.

For instance, you might be at risk if you have more stock investments and do not have other diversified assets that are less prone to volatile price swings. Go for high-quality bonds like municipal and corporate bonds to limit the effect of a market downturn.

Expect large surges after big dips: As per market trends, the best days come right after the worst ones. You might miss out on this opportunity if you liquidate your assets, as you might have to buy the same assets at a higher price and pay tax liabilities.

For instance, the investors who sold off their assets in March 2020 after the pandemic-induced market drop missed out on all the financial opportunities of the V-shaped recovery in the next two years.

Ignore the noise: The media has a high influence on us. The recent news about the market can influence you and your day-to-day life. So tune out of the 24 seven market news as it can lead to erratic and unnecessary trading that can stray you from your financial goals.

It is necessary to fact-check the doom-and-gloom headlines, which can lead to erratic behavior. Instead, get in touch with a trusted financial advisor for reliable updates.

It can be an unnerving experience for most investors towards the stock market swing up and down. From dealing with the fear of incurring immediate losses to understanding the fluctuation trends, getting in touch with a smart financial advisor can help.

They are experts who understand the bull market that will follow to erase the losses of the bear market. Hence they can help you to revisit your investment plans and set long-term and short-term financial goals to create and manage a diversified investment portfolio.

Your diversified investment portfolio can be created with the right mix of asset classes so that your hard-earned money is preserved for growing your investments over time.

From reviewing your financial approaches and offering transparent investment insights, the right financial planner can help you to stay on track and adjust your priorities over time, even during a market downturn.

So keep calm even when you are stressed about a bad market, and get the right advice from a reputable financial planner.