The stock market has been on a rollercoaster of ups and downs over the past year. If all this volatility is starting to make you feel sick to your stomach, you're not alone.
Even seasoned investors are feeling the pressure of this bear market, especially as experts continue to warn that a recession may be on the way. If that happens, we could be in for even more volatility over the coming months.
This type of turbulence is never easy, but there's one move I use to help protect my investments. Though it may sound ridiculously simple, it's more effective than you might think.
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Avoid checking your portfolio
When the market is in a rough patch, I like to set my savings on autopilot so that I don't need to constantly check my investment account. While this tactic may sound too simplistic to do any good, it sometimes can be incredibly helpful.
Even the strongest investments may lose value during a bear market. Most investors have watched their portfolios drop at least a little over the past year. Unless you have nerves of steel, that can be difficult to stomach.
When you're feeling unnerved by market volatility, it's easy to panic and start selling off your investments in an attempt to salvage as much of your portfolio as possible. But when you sell your stocks during a market dip, you're more likely to lose money -- as you're selling when prices are lower.
One of the toughest parts of investing, then, is not letting emotion fuel your decisions. Even if you know you shouldn't sell right now, it can be difficult to constantly watch your account balance drop and still keep your money in the market.
Managing market nerves
I made this mistake years ago when I first began investing. I bought when the market was thriving; then, at the first sign of a downturn, I panicked and pulled all my money out. Soon after, stock prices recovered, and I immediately regretted my decision. Then when I later reinvested, I ended up paying higher prices for the exact same investments I had just sold.
When my savings are on autopilot, though, I don't have to check my portfolio as often. Even if I'm aware that the market is down, it's easier to avoid panicking when I'm not looking at my actual account balance.
Automating your savings can look different, depending on how you invest. If you're investing in a 401(k) or IRA, for example, you may set up automatic transfers from your paycheck or bank that go straight to your investment account.
Even if you're not in a position to invest more right now, it can still be helpful to avoid constantly checking your account. By simply leaving your money alone, you're more likely to survive a downturn unscathed.
A great reason to be optimistic right now
Another way to help relieve volatility anxiety is to keep a long-term outlook. In the moment, the smallest market fluctuations can often seem alarming. But over decades, even the most severe recessions and bear markets haven't stopped the market from experiencing positive returns.
In fact, since 2000, the S&P 500 is up by nearly 180% -- despite facing some of the worst downturns in history during that time.
The market may seem bleak right now, but things will get better. No slump lasts forever, so it's only a matter of time before the next bull market begins and stock prices are surging, once again.
In the meantime, the best thing you can do is just hang in there. Try to avoid taking your money out of the market if at all possible, and if you can swing it, you may even choose to invest more.
It's not easy to invest during times like these, but patience will pay off. By staying focused on the long term and trying your best not to panic over these ups and downs, you'll be in a much better position when the market inevitably recovers.
