In this episode, Corey and Rachelle take a slightly different approach to talking about the stock market this year. There have been many ups and downs over 2022, but as investors, how do we deal with that volatility? What should we do differently, if anything?
In some situations, doing nothing is the best option:
- First, unless you have a specific reason to do so, now is not the time to exit the stock market. Selling investments when they are down locks in losses. If you are a long-term investor, it’s unlikely that makes sense for you.
- Quit looking at things every day! We all know things have been messy this year. Looking at your accounts every day will not change that, but will increase your stress level. You should be reviewing your accounts every few months, but for long-term investors it is generally not necessary to do that daily.
There are a just a couple more proactive things you can consider as well:
- You may want to consider rebalancing back to your original target allocation. When the market is volatile, your allocation can become very skewed to any areas of the market that have outperformed relative to others. Not the same as selling out of your investments entirely.
- Think about investing “extra” money you have on the sidelines. If you are sitting on money you do not need in savings (NOT your emergency fund) put that money to work for you. This is always true, but especially so when the market is down. Treat this like a sale on investments.
- If you have money in a taxable brokerage account, you can also consider doing some tax-loss harvesting. More on this topic was recorded in Episode 29 on Tax Loss Harvesting.
If the market is making you nervous, do your best to avoid the constant doom and gloom financial reporting. And keep in mind your time horizon. If you are not retiring for 20 or 30 years, it doesn’t make sense to stress out a bunch about the stock market right now.
For more financial planning tips from Corey and Rachelle, find them on social media!
LinkedIn: @CoreyJanoff and @RachelleVanderzanden; Instagram: @CoreyJanoff and @VanderzandenRachelle; and Twitter: @CoreyJanoffCFP and @RachelleFinance