Q. So I’m watching the stock market go crazy. I’m 50, and my retirement savings are taking hits. I’m 70% invested in stock mutual funds, mostly ETFs, and 30% in bonds. I’m feeling nervous but also afraid to market time. How to deal with market volatility?
— Nervous investor
A. You’re not the only one who is nervous watching the ups and downs.
Rather than be reactionary, let’s take a wider look.
Indeed, market volatility is uncomfortable for investors especially when accompanied by news headlines that may elicit an emotional response, said Deva Panambur, a fee-only planner with Sarsi, LLC in West New York.
Tuning out the headlines and ignoring volatility is easier said than done, he said.
“In investing, it is best to think in terms of probabilities rather than certainties,” he said. “The probability of negative returns in the short term may be notable but the probability of positive returns over the long term is significant, if you are appropriately invested.”
Seen in this way, volatility can be considered as the price paid for long-term returns, he said, so you should construct a resilient portfolio in line with your goals, time frame and risk tolerance to maximize the probability of achieving your goals over time.
You can create a resilient portfolio by ensuring it is diversified and has appropriate exposure to companies of various sizes, in various sectors and across geographies, Panambur saud.
“If your current mix of investments is too volatile for your comfort you could increase your allocation to bonds which are more stable,” he said. “Certain stocks, such as those of dividend paying companies and high-quality companies, tend to be relatively less volatile. You could allocate to these to tamp down your volatility.”
However, you will want to make changes gradually and opportunistically so that you don’t sell at the lows, he said.
“Making changes to your portfolio to time the market can hurt you overtime even if you get in right occasionally,” he said.
This article was originally published in March 2025