1. Stick to Your Long-Term Plan

Your financial plan was built with ups and downs in mind. Market volatility is normal, and reacting emotionally can derail years of disciplined planning. Instead of changing course based on short-term headlines, trust in the long-term strategy that was designed for your goals, risk tolerance, and timeline.

Example: In March 2020, when COVID-19 fears triggered a rapid market crash, many investors panicked and sold their holdings. But those who stuck with their diversified portfolios saw the market recover quickly—by the end of the year, the S&P 500 had posted a strong gain.

2. Avoid Emotional Decisions

Fear and uncertainty can push investors to make impulsive choices, like selling during a downturn or chasing high-performing stocks. Emotional decisions often result in locking in losses or missing out on rebounds. Take a step back, breathe, and revisit your plan before making changes.

Example: During the 2008 financial crisis, many sold their investments near market bottoms. But those who held steady avoided selling low and benefited when markets recovered, with the S&P 500 tripling in value over the next decade.

3. Focus on What You Can Control

You can’t control inflation, interest rates, or global events—but you can control how much you save, your spending habits, and your asset allocation. During rocky times, it’s often more productive to review your budget or rebalance your portfolio rather than trying to outguess the market.

Example: An investor worried about rising inflation might be tempted to move all their assets to cash. A better move might be rebalancing slightly to include inflation-protected bonds, while continuing to contribute steadily to a retirement plan.

4. Remember the Power of Diversification

A well-diversified portfolio helps smooth out the bumps by spreading risk across asset classes and sectors. While some investments may drop during a downturn, others may hold steady—or even rise. Diversification doesn't prevent losses but helps reduce the impact of any one investment falling.

Example: In 2022, while U.S. tech stocks fell sharply, energy stocks rose significantly. Investors with a diversified portfolio saw less extreme performance swings than those heavily concentrated in one sector.

5. Review, But Don’t Overreact

It’s wise to periodically review your investments, especially during major market shifts—but review doesn’t have to mean react. Make adjustments only if your goals or life circumstances have changed, not just because of market noise.

Example: A 55-year-old investor sees their portfolio drop 10% and panics. Upon review, they realize they’re still on track for retirement in 10 years and their portfolio is properly balanced. No change needed—just a reminder to stay the course.

6. Consider Opportunities, Not Just Risks

Market downturns can feel scary, but they often present opportunities. If you have extra cash or are still in the accumulation phase, downturns can be a great time to buy assets at a discount—think of it as a sale on long-term investments.

Example: Someone who continued contributing to their 401(k) during the 2022 market dip bought shares at lower prices and benefited when markets began recovering in 2023.

7. Talk to Your Advisor

During turbulent times, leaning on your advisor can provide reassurance and perspective. An outside, professional view can help prevent knee-jerk decisions and keep your plan on track.

Example: A retiree worried about portfolio losses schedules a meeting with their advisor. Together, they review their withdrawal strategy and find that their cash reserves and bond ladder are more than sufficient to weather the storm—no drastic moves required.