1. Watching from the sidelines may cost you When markets become volatile, many people try to guess when stocks will bottom out. In the meantime, they often park their investments in cash. But just as investors may be slow to recognize a retreating stock market, they also fail to see an upward trend in the market until after they have missed opportunities for gains. Missing out on these opportunities can take a big bite out of your return.
2. Dollar-Cost Averaging makes it easier to cope with volatility
Most people are quick to agree that volatile markets present buying opportunities for investors with a long-term horizon. But mustering the discipline to make purchases during a volatile market can be difficult. You can't help wondering, "Is this really the right time to buy?"
3. Now may be a great time for a portfolio checkup
Is your portfolio sufficiently diversified to endure through any market conditions? Meet your financial advisor to find out. Your portfolio's weightings in different asset classes may shift over time as one investment performs better or worse that another.
4. Tune out the noise and gain a longer-term perspective
Numerous television stations and websites are dedicated to reporting investment news 24 hours a day, seven days a week. While the media provide a valuable service, they typically offer a very short term outlook.
5. Believe your beliefs and doubt your doubts
There are no real secrets to managing volatility. Most investors already know that the best way to navigate a choppy market is to have a good long term plan and well diversified portfolio. But sticking to these fundamental beliefs is sometimes easier said than done. When out t the test, you sometimes begin doubting you r beliefs and believing your doubts, which can lead to short term moves that divert you from your long term goals.