Podcast Episode 371: Don’t Let Fear Take Over During Market Volatility

We’ve seen some turbulence in the market recently and that’s a time when fear begins to drive some investor decisions. It’s natural to let emotions creep in, but proper planning should help you maintain the right perspective on your investments. Even with the right planning, we’ll still hear from some clients who have questions or concerns. In our latest episode of the Money Wisdom podcast, Jake Doser, CFP®, CPWA® joined the show to share some of the responses we get from clients during volatile times and discuss our approach to navigating the ups and downs.

It all starts with having a solid financial plan. As Jake explains, a well-thought-out plan can serve as a guiding light during market downturns, helping investors stay the course and avoid making impulsive decisions based on fear. Most of our clients have a financial plan that drives their investment decisions, which greatly reduces the number of panic calls they receive during market crises.

But when you look at investing, we want to make sure you understand the concept of risk appetite and how it plays a crucial role in financial planning. Understanding when you plan to use your money, how you intend to use it, and your comfort level with risk are all essential factors in determining the right investment strategy. For instance, someone who is using their funds for everyday expenses might have a different risk tolerance compared to someone who is investing for inheritance purposes.

One of the common mistakes investors make during market downturns is pulling back on their contributions to retirement accounts like IRAs and 401(k)s. There’s a flaw in this way of thinking because you miss out on the benefits of dollar cost averaging. By continuing to invest regularly, even when the market is down, investors can buy at a discount and jump-start their growth when the market recovers.

The role of a financial advisor during these times is to encourage clients to make good choices but also to prevent them from making bad ones. We want to help you make decisions based on facts rather than emotions and provide gentle push-back when clients are considering impulsive moves. This is why we want to take a proactive approach to planning rather than react to what life throws our way.

Let’s finish with a reminder that everyone needs to have a plan that takes into account their unique needs and goals, rather than relying on general rules of thumb. By being proactive and having a tailored plan, investors can navigate market volatility with confidence and peace of mind.

Here’s some of what we discuss in this episode:

• The responses we typically get from clients when the market is up and down.

• When we might make changes to your investments in times of volatility.

• Our role when someone feels like they can’t handle a bad week or bad month.

• Should you pull back on 401k contributions when the market is down?

• Is there ever a time to panic?