- Many investors are reeling after months of stock market turbulence.
- If you keep your eyes on the big picture, you should have an easier time coping with all of that volatility.
It may not even be something you remember in the long run.
Checking my brokerage account balance has not been a fun experience for me this year. Stocks started the year off rocky and have been nothing but volatile ever since. And during the latter part of September, my portfolio took an additional hit when inflation concerns and recession fears led to even more market turbulence.
But while I can't say I'm thrilled with the state of the stock market right now, I'm also not exactly losing sleep over it. And neither should you.
Focus on the big picture
If I were within a year or two of retirement, I'd probably be sweating bullets right now given the losses I'm seeing in my investment portfolio. But I'm not close to retirement age. And since I'm not planning to cash out the investments in my brokerage account to use as income anytime soon, I'm not panicking over the state of the stock market -- and my portfolio.
Now if you're not used to stock market volatility like what we've been experiencing this year, then it's easy to see why the events of the past nine months might have you worried. But remember, you only take losses in your brokerage account when you sell off stocks when they're down. If you don't sell, you don't lose money. And if you're saving for a far-off milestone like retirement, then there shouldn't be a need to sell your stocks anytime soon.
The operative word there, however, is "shouldn't." If you don't have a fully loaded emergency fund, then you might land in a situation where you do need to sell off some stocks to scrounge up cash. But if you make a point to maintain an appropriate level of savings (ideally, enough to cover a good six months' worth of essential living expenses), then stock market volatility shouldn't bother you, since you shouldn't need to access your portfolio in the near term.
Do your best to look ahead
Whenever you're in a tough situation, whether it's an illness, a breakup, or a layoff, it's a good idea to imagine yourself having already gotten through it. Well, the same holds true with regard to today's stock market. As frustrating as today's market might be, try to picture a scenario many years in the future where your portfolio has recovered fully and you're on track to meet your retirement goals.
In fact, by the time you enter retirement, you may not even remember the stock market events of 2022, because they might end up being nothing more than an insignificant period of volatility. And while it's difficult to picture that now, you should do your best to try.
The more calm you're able to remain during periods of stock market turbulence, the less likely you are to make rash decisions that hurt you financially -- like selling off stocks when they're down due to being fearful. We could, unfortunately, be in for many more months of rockiness on the stock market front. But if you try your best to look ahead, you might manage to avoid a world of unnecessary anguish.
Alert: our top-rated cash back card now has 0% intro APR until 2025
This credit card is not just good – it’s so exceptional that our experts use it personally. It features a lengthy 0% intro APR period, a cash back rate of up to 5%, and all somehow for no annual fee!
Click here to read our full review for free and apply in just 2 minutes.
Our Research Expert
We're firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers. The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.
The Ascent is a Motley Fool service that rates and reviews essential products for your everyday money matters.
Copyright © 2018 - 2024 The Ascent. All rights reserved.