Ignore the market noise
Recent market volatility is unsettling for even the savviest of investors. It can naturally cause concern and could lead to impulsive investment decisions that may not align with your long-term financial goals. And yet by recognizing short-term market uncertainty for what it is, you can help ensure that it doesn’t derail your long-term investment success.
It’s important to remember that, as individual investors, we have no control over volatility. What we can control is our own mindset; the more level-headed we remain, the better our investment results will be over the long haul. Don’t be swayed by the short-term noise.
Stay focused on the long-term
When looking at historical rates of returns, don’t focus solely on the upside. Although it’s practically impossible to forecast when the next upward or downward spike in the market will take place, having a well thought out investment plan can help provide a sense of confidence that you can ride out the volatility.
Avoid panicked selling
Recent headlines might make you want to cash out your investments and wait it out on the sidelines. That’s an understandable feeling. However, it’s not the best strategy. Leaving the markets in the midst of volatility is usually motivated by fear, which is responsible for some of our biggest investment missteps. Anyone who sold during the 2008-09 market meltdown locked in steep losses and most likely missed a powerful rebound.
Seek out financial advice
Staying invested during market swings isn’t always easy. However, market volatility can be beneficial if it forces you to revisit your portfolio with an eye toward improving diversification or re-assessing your tolerance for risk.
Research on the value of advice has shown that investors who work with a financial advisor not only save at a higher rate than non-advised investors, but they also have a greater feeling of confidence about their financial future than those who don’t work with an advisor. Investors who worked with a financial advisor for more than 15 years accumulated 3.9X more assets compared to those who didn't.1
Working through some of your concerns with an advisor can allow you to make reasoned investment choices, view your portfolio with less unease, stick to your plan and ultimately help keep you on track to meet your financial goals. Keeping an eye on the long-term strategy will ultimately help keep you on the road during the short-term bumps and turns.
Contact a Scotiabank Advisor today to review your current plan or develop a plan that makes sense for you
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1. Center for Interuniversity Research and Analysis of Organizations, 2016.
Legal Disclaimer: This article is provided for information purposes only. It is not to be relied upon as financial, tax or investment advice or guarantees about the future, nor should it be considered a recommendation to buy or sell. Information contained in this article, including information relating to interest rates, market conditions, tax rules, and other investment factors are subject to change without notice and The Bank of Nova Scotia is not responsible to update this information. All third party sources are believed to be accurate and reliable as of the date of publication and The Bank of Nova Scotia does not guarantee its accuracy or reliability. Readers should consult their own professional advisor for specific financial, investment and/or tax advice tailored to their needs to ensure that individual circumstances are considered properly and action is taken based on the latest available information.