If you’ve been paying much attention to the markets over the past few years, you’ll know there’s one consistent theme: things move quickly, and not necessarily in a straight line. There have been unprecedented interest rate lows of near zero during the pandemic, followed by the Fed’s more recent aggressive hikes to battle inflation.
The geopolitical landscape has been turbulent to say the least. All have contributed to more frequent market swings. In these volatile times, having a well-thought out strategy is more important than ever. Here are your starting points.
Start With Clear Goals
Before you start reading charts, analysing markets, and reviewing forecasts, be clear about why you’re investing and what you want to achieve. Building long-term wealth, generating income, or preserving capital all require different strategies. Identifying your long-term goals and acting in accordance with them matters far more than today’s headlines.
Market news is designed to be immediate and demand your attention. However, reacting to it often leads to quick decisions that don’t align with your overall goals. Good investment management begins with knowing what you’re working towards. That way, you can filter out noise and focus on what’s relevant to your actual plan.
Why Diversification Is Your First Line of Defence
Diversification is one of the most important practical tools in investment. Putting all your eggs in one basket is a quick way to lose your money. On the other hand, spreading your investments across different asset classes, regions, and sectors, you reduce the potential impact that any single market event can have on your portfolio. It’s not unusual for one area to struggle. In that case, another may perform much better, which helps balance results.
Don’t Confuse Activity With Progress
Volatile markets create the urge to act. When prices move sharply, fear sets in, and it often feels like you need to do something in response. In reality, frequent trading can increase costs, create tax consequences, and lead to decisions driven by emotion.
Your progress in investing isn’t measured by how often you make changes. It’s about aligning your approach with your goals. Staying invested through ups and downs is often more effective than trying to time exits and re-entries based on short-term movements.
Build in Flexibility
The best investment strategies aren’t written in stone, but they’re also not rewritten every time conditions change, so you need to have just the right amount of flexibility. This comes from regular reviews, not reactive decisions. Check your portfolio periodically to rebalance, reassess assumptions, and make adjustments when your circumstances change. The idea is not to create a moving target, but to adapt thoughtfully, only when necessary, and in line with long-term goals.
Endnote
Market volatility is outside of your control. However, it is something you can plan for. The behaviors above will better equip you to handle uncertainty. Instead of reacting to every change, you’ll have set up your investments in a way that allows them to do their job, even in volatile times.
