Taking action at an unpredictable time can help you feel more confident about how things will turn out. That said, if you think you need to make changes to your portfolio, it’s important to make sure the steps you take don’t jeopardize your long-term financial goals.
Here are some things you can do to control the big picture without losing sight:
Run some numbers
If you think you need to do something, consider starting with your calculator. Numbers can give you a reasonable way to create things that can fix some of those anxious feelings. For example, you can analyze how market conditions have affected your portfolio and compare it to your expectations based on your risk tolerance. Or compare your current asset mix with your goal and rehabilitation if it is 5 percentage points or more.
Speak the language of action
Describing your strategy as “staying on course” or “doing nothing” can make you feel like you’re not doing enough. Instead, describe whether you are fighting the emotion to get out of the market or giving your portfolio a chance to bounce back. You believe in the mix of your assets through the ups and downs of the market and it takes mental strength. Give yourself credit where you are.
Talk about it
Consider sharing your action plan with others. Take a look Vanguard Blog For inspiration. When other people show support for what you are doing and they are doing it too, it can make you feel good about your choices. Helping others when they have questions can also go a long way in boosting your confidence.
Take a break from history
So far, every market recession in history has been followed by a rebound. We don’t know when it will happen or how big it will be, but there is good reason to believe that better times are ahead.
Think about what you can control
If you save for retirement, you may be able to control how much you save or how long you can save (if you remember your retirement date). If you retire, you may be able to adjust the percentage you can withdraw from your portfolio during a market downturn.
Your spending habits are also under your control. Of course, it’s not realistic to expect that you’ll start clipping coupons, switch to generic brands, and skip your afternoon coffee run altogether. Try to reduce your spending in just one area at a time to see which works best for your life.
We acknowledge that this is your portfolio, and you control your asset mix. We do not recommend changing your asset mix in terms of market movements, but keep it short if you are determined to make changes to your portfolio. Here are some examples of small things you can do: Direct one of your stock fund’s investment earnings into a bond fund or change the asset mix of a single account instead of your entire portfolio.
You are part of the vanguard community of investors. Rely on us to provide you with the leadership you need in times of uncertainty. Depending on an expert can bring order to situations that seem out of control and can help you reduce anxious feelings.
All investments are at risk, including the potential loss of money you invest. Diversity does not guarantee gain or protect from loss.