3 Brokerage Account Mistakes to Avoid When the Stock Market Is Volatile

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  • Stock market turbulence can drive investors toward less favorable behaviors and choices.
  • It's important to keep your cool during a down market to avoid losses.
  • Focus on your long-term investing goals and avoid checking up on your portfolio every day.

Try to avoid these at all costs.

Investing money in a brokerage account is a great way to grow wealth, and also, to generate a solid return on cash you don't need to reserve for emergencies. But the past year has been very difficult for investors for one big reason -- the stock market has taken them on a wild ride.

Stocks have been volatile since the start of 2022, and for many reasons. These include inflation, the Ukraine conflict, the Federal Reserve's interest rate policies, and recession fears, just to name a few.

As a result of all that volatility, a lot of people are now seeing year-to-date losses -- in some cases, big ones -- in their brokerage accounts. And that's certainly unsettling.

Unfortunately, we could be in for many more months of stock market volatility, and there's just no way to know when the market will finally settle down and start staging its recovery. So your best bet during this time is to protect yourself from unnecessary losses. You can do so by steering clear of these potentially harmful mistakes.

1. Checking your portfolio balance every day

Even during periods of strong performance, the stock market can be fickle, and the value of your portfolio can fluctuate a lot from one day to the next. That's why it's really never a great idea to check your brokerage account on a daily basis -- not when the market is up, and certainly not when the market is down. Checking your balance frequently could really mess with your mental well-being, and that's stress you don't need to put on yourself.

2. Selling on those really bad days

In a volatile market, you might have bad days, and then you might have those really bad days when the value of your portfolio tanks a lot. It's those days you need to be careful of -- and try not to react to. If you sell stocks when they're down in a very big way, guess what? You're going to lock in a very big loss. But if you stay cool and avoid selling, you'll put yourself in a position to potentially not lose any money at all.

3. Not thinking long term

When the value of your portfolio drops, it can be difficult to cope with. But try to remember that if you're investing over a lengthy period of time, a single dip -- or even a series of dips, like the one many investors have experienced over the past 11 months -- probably won't end up mattering. In fact, if you're investing now for retirement and that milestone is 20 years away, there's a good chance that by the time your career wraps up, you won't even remember the volatile market that tortured you in 2022.

It's easy to understand why you might be struggling right now as an investor. After all, a lot of people are in that boat, and there are no signs that the stock market is on the verge of a rally. But do your best to avoid these dangerous mistakes during a volatile market so you can ride out this period of turbulence and, ideally, come away without any losses at all.

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