Volatile markets can inspire feelings of fear and anxiety among investors. Market surges and sags can occur for any number of reasons, including inflation fears, trade policy concerns, tax breaks, economic optimism, global events or a recession watch. When the stock market gets rocky, focusing on your overall financial picture, combined with sound planning, can pay dividends.
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These five steps can help steady your pulse during market spikes and elevate your financial security:
1. Revisit your financial goals. Setting clear, prioritized goals–each with steps to achieve the goal, a price tag and a time frame–will help guide your investment approach. Good financial goals, tied to a sound long-term financial plan, typically will survive short-term market ups and downs and help you weather the impacts of inflation and other economic conditions.
2. Diversify your assets. A significant market movement can illuminate concentration risk, the risk of amplified losses that may occur from having a large portion of your holdings in a particular investment, asset class or market segment relative to your overall portfolio. It’s important to diversify across, and within, the major asset classes. Do you hold multiple asset classes (such as stocks, bonds and cash equivalents)? Are your stock holdings spread among different sectors (biotech, electronics, consumer staples and emerging markets, to name a few)? Is your…
