3 Simple Tips to Help the Rookie Investor Weather Stock Market Volatility
Stock market volatility is a common event in investing. US-China trade war tensions are certainly not making things any better. During such unfortunate market circumstances, the last thing you want to do is to make rash and emotional investing decisions. Here are 3 simple tips to help you navigate and weather stock market storms.
1. Stay calm; don't panic.
During stock market downturns, don't make any rash or emotional decisions. A lot of investors, especially newbie investors, may want to go on a selling spree. This is the last thing you want to do. Instead, consider remaining calm. Understand that during wild stock market fluctuations, almost all investors also suffer financial losses. You have company; you are not alone.
2. Buy more or the dip.
Stock market volatility offers investors lucrative buying opportunities. If you have cash sitting around, this is a great opportunity to take advantage of the investing strategy of "buying low and selling high." After all, cash is trash, not king, if you don't invest it! Even if you don't have cash to buy securities while prices are low, just continue to remain calm. The stock market always bounces back.
3. Be ready to rebalance your portfolio.
When your investment portfolio no longer aligns with your investing strategy due to stock market downturns, rebalancing it may be a smart strategy. It's okay to rebalance your portfolio, as long as it is for the right reasons. Understand that a well-diversified investment portfolio may obviate the need for re-balancing.
The bottom line
Stock market volatility is a common investing phenomenon that will never go away. During such events, the astute investor should remain calm and buy more equities. Lastly, if done for all the right reasons, rebalancing your portfolio may also be another option. The markets always bounce back. The patient investor who stays the course will emerge victorious at the end.
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