A financial consultant at Fidelity, Ellen O'Connell, CFP®, recently answered one of your money questions.
The recent stock market ups and downs are really making me nervous. What should I be doing with my investments?
When dramatic movements happen in the market, it's completely understandable that you would feel concerned about what it means for your investments. Although market shifts can be stressful, they are a normal part of how markets behave. I have found that investors who remain focused on their goals, and not headlines, often have the most long-term success.
Every day, I work with people creating plans and investment strategies that reflect their individual goals, time horizon, and tolerance for risk. I have found that those who have a plan and a strategy in place are better able to stay focused on their goals and feel more comfortable weathering the inevitable market fluctuations.
It's important to revisit your plan when your situation changes, like when you get a new job, get married, or get divorced. Life events happen and it's important that you revisit your plan to ensure it's aligned to the goals that are most important to you. But the volatility and noise in the market right now are typically not a good reason or the right time to make a change.
If watching your balances fluctuate is too nerve-racking for you, think about changing your asset allocation to one that feels more comfortable. This recent downturn might be an eye opener that you have invested too aggressively for your true risk tolerance. However, you also need to be careful of being too conservative, especially if you have a long time before you'll need the money. Strategies that are more conservative may not provide the growth potential you need to achieve your goals.
If the market moves have reduced your mix of stocks, bonds, and cash in a big way, you may also want to consider putting some uninvested money into stocks while they are down (also known as rebalancing your portfolio). This way, you are buying assets when they are low in price.
Remember, if you remain disciplined, patient, and diversified during market volatility you will typically be in a better position to weather unexpected bumps along the way. Focus on your long-term goals. And keep investing. When markets are down, stocks are on sale. So if you continue investing, you'll be well-positioned when the markets eventually rebound.
To learn more, take our Challenge.
Ellen O'Connell is a financial consultant at Fidelity's Investor Center on Congress Street in Boston. Throughout her 28 years with Fidelity, Ellen has helped clients develop financial plans to achieve their individual goals and improve their financial wellbeing. Most recently, Ellen worked on the Women Investors squad, focusing on empowering women to become more engaged with their finances.
Ellen holds a bachelor of science in business administration from Merrimack College in North Andover, Massachusetts, and is a CERTIFIED FINANCIAL PLANNER®.
Next steps to consider
Call or visit to set up an appointment.
Set priorities, determine your goals, and build your financial plan.
How to tackle investing, money, and family matters.