Not a fan of the stock market at the moment? Try These 4 Strategies – The Motley Fool | Jewelry Dukan

With the S&P500 is now trading below the 4,000 mark again, fear and uncertainty have returned to the investor public. It’s difficult to focus on a long-term investment plan when everything is red, but it’s also necessary to keep a cool head during tough times.

Let’s go through four strategies that can help you stay in control of your behavior when your portfolio takes a nosedive.

1. Don’t look so often

Repeatedly reviewing your portfolio value when the market is in free fall will not make you feel very good. Obsessively updating your investment apps encourages an emotional rather than a prudent decision. Try to only check your numbers every once in a while – quarterly if you can stand it.

Image source: Getty Images.

For the purists, deleting your investing apps entirely can help eliminate the urge to constantly know how your stocks are doing. Research in behavioral finance has found that easier access leads to more trade; high emotions reinforce this effect. If you take away this access entirely, you are less likely to make an investment mistake, such as B. Selling at or near the bottom.

2. Diversify your investments

Diversification is arguably more important today than it has been in recent times; high inflation, rising interest rates, international conflicts and domestic discord contribute to this sentiment. Since there’s no way to really know what’s around the corner (although many believe there’s a high probability of a recession), the need to diversify is simply paramount.

This means making sure you have a predetermined asset allocation (a plan of how much you will invest in each asset class) and are regularly rebalanced on a fixed schedule. It also means diversifying your money enough to contain portfolio volatility; For most people, stocks, bonds, real estate, and other physical assets will be part of the equation.

Falling asset prices are the current trend in most markets, but holding diversified assets will help keep your overall net worth more stable than if you were to commit to just one investment.

3. Control what you can control

You can’t control what happens next in the stock market, so it’s a much better idea to focus your energy on factors that are yourself can Control. The biggest financial factor over which you have at least some control is your income. Picking up a side hustle or gig work, most of which can be done remotely, has never been easier; If you have an entrepreneurial spirit, it is worth exploring.

You also have significant control over your investment plan. Instead of trying to find the next market bottom, consider setting up automatic deposits into your investment portfolio every week or two. This removes emotion from the equation and ensures that you at least remain consistent with your investing behavior. What the market does in the short term is not in your hands.

4. Keep an eye on the long term

It’s easier said than done, but focusing on long-term portfolio results is essential when it comes to sound investment and financial planning. Short-term volatility is nothing but noise; Before you sell all your stocks, remember that stock investing has been one of the most reliable wealth generators over the past century. The S&P 500 has weathered wars and economic disasters, returning to the 8% to 10% range over the past 100 years (depending on how you treat dividends).

Also, selling after the market has fallen doesn’t do much good. This is because it may be harder to achieve your long-term goals, you may need to extend your holding period for tax reasons, and you have indulged in emotional decisions surrounding your investments. It’s better to understand that market volatility is part of the investment game and this won’t be the last time we see a rapidly oscillating market.

Market anxiety is understandable

I can’t blame anyone for feeling uncomfortable about how the stock market performed over the first eight months of the year. However, this is an opportunity to demonstrate smart investing and let the market do what it wants while you focus on what you can control. This includes not looking at your stocks every day, building your income, and focusing on the long term as opposed to tomorrow.

History has shown that stock investing benefits the patient. Be consistent in your investing behavior and you will be rewarded accordingly when the market hits a new all-time high.

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