Surviving a Volatile Stock Market
I hope you enjoyed your Holiday Season and had some time off to relax. My family took a road trip to Julian California. We rented a cabin by a lake and had a great time! In Julian the apple pie and cider are absolutely amazing.
In 2018, we saw an incredible amount of volatility in the market. But stock market volatility should not scare you! Even large stock market fluctuations are completely normal and even somewhat predictable.
One thing you must remember about stock market volatility is that you don't actually lose money until you react to it. Don’t Sell!
If you let yourself panic every time the market falls by a few percentage points or even a correction (a decline of 10% or more), you're going to harm your health and possibly your portfolio.
Make sure you have 3-6 months of living expenses in cash in the bank at all times. The last thing you want is for a surprise expense to force you to sell investments during a down market.
In Vanguard’s 2019 Outlook report, Vanguard remains cautious and guarded for 2019. They highlight a few points:
- Stock market volatility will likely continue, especially in the current political and economic climate.
- Long term returns are accentuated by staying committed to a predetermined asset allocation amid short term volatility.
- Building a portfolio that reflects your need for risk (expected higher returns) is key to a successful financial plan.
The good news is as of today, the S&P 500 achieved its first four-day winning streak since September. Is it safe to say the market correction and wide swings are over? Maybe not. But the important thing to remember is to stay the course, think long-term and be sure to follow the 10 Rules for Women to Live by to Achieve Financial Independence.
About Angela
Angela Dorsey is the founder and financial advisor at Dorsey Wealth Management, a fee-only financial planning firm based in Torrance, California, helping women prepare for retirement. Angela earned a BS in computer science from Loyola Marymount University, an MBA from UCLA Anderson School of Management, and spent 20 years as a Senior Compensation Specialist in large corporations before becoming a CERTIFIED FINANCIAL PLANNER™ professional and a Registered Investment Advisor (RIA). That background gave her the tools to couple with her passion for empowering women to make the best financial decisions possible. Angela lives in Torrance, California, with her husband. She enjoys spending time at the beach or surrounded by nature. To learn more about Angela, connect with her on LinkedIn.