Even though now isn’t the first time the stock market has fallen by more than 20%, this newest wave of volatility has panicked many investors.
There are two common reactions investors have when the market falls: liquidating portfolios (to prevent further losses) or buying more (to maximize potential gains).
Can you guess which type of call I’ve received more in recent weeks?
While historically stocks have provided greater returns than bonds, there are three times you probably shouldn’t buy stocks:
- You can’t make ends meet
- You have no emergency fund
- You need the money in the short-term
The most important thing in weathering the volatility of the stock market is knowing your risk tolerance and building a well-diversified portfolio (even if it includes low-yield investments) that reflects your risk tolerance and financial goals.
If you need help deciding whether you should sell out your portfolio, hold on, or buy additional stock shares, be in touch. Call 02-624-2788 or email doug@profile-financial.com Together we can try to avoid a financial disaster.
