As the world continues to watch Russia's invasion of Ukraine, it's normal to feel a mix of emotions. If you're investing in the stock market, it's also normal to wonder how much this war could affect the global economy and the market. This is particularly true after Western nations announced sanctions against Russia and blocked the country from the international SWIFT banking system.
While nobody knows for certain what will happen with the war, the economy, or the market, there are a few things to keep in mind right now.
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1. The market could be shaky in the future
Periods of unrest and unpredictability can often -- but not always -- result in instability within the stock market. The sanctions against Russia could also have an impact on U.S. stocks, particularly if this war continues much longer.
This means that the market could be shaky in the coming weeks or months. Sectors ranging from banking to oil and gas might be affected by these sanctions, and the war could even impact industries that have seemingly few ties to Russia.
Again, nobody knows exactly how everything will play out, and it's uncertain how much of an effect this war will have on the rest of the world. While there's no reason to panic, it's wise to be prepared for the possibility of more market volatility, just in case.
2. Selling right now could be risky
Since the market could always be more volatile in the future, it may seem like a good idea to pull your money out now before things get worse. However, this can be a risky move.
Nobody knows for sure what will happen with the market, so there are no guarantees that stock prices will drop. Case in point: Many experts predicted that we would experience a prolonged bear market at the beginning of the COVID-19 pandemic. After a brief crash, though, prices almost immediately rebounded.
This isn't to say that we're going to experience a similar phenomenon now. But the stock market can be unpredictable, and it's too early to say how the situation in Ukraine will play out. Rather than making any knee-jerk reactions, it may be best to sit tight and see what happens.
3. It's wise to maintain a long-term outlook
The world is a stressful place right now, and it's normal to be worried about your portfolio. In times like these, though, the best thing you can do is keep your sights on the long term.
The stock market has a long track record and experienced the effects of many wars and other periods of unrest over the decades. Despite everything, though, it's managed to earn positive average returns over time.
It's possible that things will get worse before they get better. However, while there are never any guarantees when it comes to investing, the stock market has a history of resilience over time.
It's a tumultuous time in the world right now, and nobody can say exactly what the future holds. If you're feeling nervous or uncertain about the market, you're not alone. By remaining calm and keeping a long-term outlook, it will be a little easier to stay optimistic about the future.
