How to manage effectively and wisely volatile markets: 5 valuable tips to follow

The stock market is at times highly volatile and choppy, making it troublesome for those investors who are not better planned or have proper investment strategy. According to the industry experts, market volatility triggers is likely to appear in several sizes and shapes. This can be in the form of policy uncertainty, geopolitical unrest, earnings report, etc., the list of which is almost limitless. Experts also opine that even the most seasoned investors are likely to get rattled with market sudden swings. However, volatility does form part of the investing avenue and should be dealt with calmly and strategically.

volatile markets

Overcoming market volatility

The experts also conclude that dramatic market moves might cause the investor to worry about his investments and strategy made. Natural reaction to it is to eliminate or reduce such stock exposure, expecting future losses, which of course does not make any sense for long runs. It is only by being adequately prepared and having clearly defined plans that the most volatile stocks can be taken care of and benefits derived.

Some tips to follow

Proper investing strategy is to be device with exposure given to different market areas including large and small caps, investment grade bonds, international stocks, etc. to match overall portfolio risk to goals and personality.

•         Keep perspective since downturns usually are short-lived and normal. But the stock market has the capability to manage recovery from such declines and offer investors with long term positive returns.
•       It is essential to comfortable with investments made in the market. Becoming nervous as the market becomes volatile, the portfolio risk level will only be found inappropriate. The key aspects to assist ensure having proper functioning investment strategy is the person’s tolerance for risk, goals and time horizon. Realistic expectations are to be set.
•        Avoid timing the market: It can be really dangerous invest-wise to move in & out of the market during highly volatile conditions. Investor decisions on when to sell and buy funds are likely to cause worse performance when compared to holding the funds. Experts suggest investors to invest during good days and avoid bad days to stay financially safe. Prediction of the market is simply impossible for anyone.
•       Regular investment inspite of volatile market is a must. Those investors investing their hard earned money regularly for months, years and even decades are not likely to get much affected by downturns. Rather than judging the present market condition, it will require disciplined investment approach, which will be quarterly, weekly or monthly to avoid dangers associated with marketing timing. Although no gains or losses will be guaranteed with downturn investing, as prices fall, the investor is sure to benefit with the long run.

·     Avail opportunities. Few actions can be taken as the market is down to be in a better position in the long run. Downturn for example, can offer opportunity to harvest tax loss.