… For most people there investments are a significant source of stress. This is especially true during economicaly turbulent times when the value of your portfolio can drop substantially.
Stressing out on about your investments can lead to poor decision making, and can cost strain on your health and family relationships. Here are some tips that can help you cope up with the anxiety during periods of high volatility.
Remind yourself of the facts
Take a look at your portfolio and remind yourself why you are invested in these positions. Perhaps it is because a corporation has a solid reputation, and a history of earnings, or maybe it is done well for you in the past. It may help you re evaluate the reasoning behind owning each investment.
If you are reasoning is still valid then there is no reason to make any changes. Safest of the stocks can decline over short term and that simply is the nature of markets. Reminding yourself out the fax can prevent you from doing something irrational, such as selling a good investment at a loss.
When times get tough you might be tempted to cash out on your Investments cut out your losses. Probably the worst mistake you can make during a market downturn. By pulling out of the market, not only will your paper losses be realized, but you will miss the opportunity to recover these losses when the markets inevitably recover.
Remind yourselves of your financial goals and focus on the big picture. The best defense against a volatile market is to stay invested and weather the storm.
Pay your debts ontime
Investing in market is not the only way to earn a return on your money. If the markets are too volatile for you, consider paying down your debts instead. The return you earn is effectively the interest rate that you avoid paying on the principal. Paying down debt is a guarenteed return on your money and can help you ease your mind during turbulent times.
Turn down the noise
Many invesrtors find themselve overwhelmed with the amount of information that is out in the market. The truth is that most of the information is irrelevant to you, and this is doubly true during financial crisis.
Reading news paper reprots, and predicting every day on how the markets will come crashing down will do little to relieve your anxiety. Focus on what’s important for your investmennts and ignore the rest.
Speak to a financial advisor
If you are anxious about your investmennts, speak to a qualified financial consultant. Every person’s financial situation is different, and having good investmennt plan that you can stick to is essential during tough times. If you find the market voltality overwhelming, your portfolio may be too aggressive. Review your asset allocation, and ensure that it is compatible with risk tolerance.
Investing over the long term is difficult, and you will undoubtely experience multiple market downturns during this time. The markets are inherently volatile and no one can reliably predict when and where the next financial crisis will happen. Spending your nights worrying about your investmennts won’t make it grow any faster. Instead, educate yourselves and focus on the long term and your anxiety will diminish over time.