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Market volatility. It can feel unsettling, even downright scary, but how you respond to market swings can have a bigger impact on your financial future than the swings themselves. Hi, I’m Alex Wolfe, a certified financial planner and head of financial planning at Base Wealth Management. Today, we’re talking about how to handle volatility in your investment portfolio and financial planning, and why staying the course can be one of the smartest moves you make. First, a little perspective. Market downturns are not new. Historically, the S&P 500 has experienced a decline of 10% or more roughly every two years.
But here’s the good news, markets have always recovered. For example, after the financial crisis of 2008, the S&P fell by over 50%, yet from March 2009 through the end of 2019, it gained more than 400%. Even in 2020, when the COVID pandemic caused a swift 30% drop in just a couple of weeks, the markets rebounded to all-time highs within a couple months. Historically, missing just the best few days in the market can dramatically lower your returns and those best days often come right after those big declines. So what can you do during periods of volatility? Stick to your plan, avoid emotional decisions, stay diversified, and keep a long-term perspective. Think of investing like a long journey, short-term bumps are normal, but if you change your direction every time the road gets rough, you’ll never reach your destination.
A diversified portfolio by spreading investments across different asset classes like stocks, bonds, alternative investments in cash or even real estate can help soften the impact of a single downturn. Regular rebalancing ensures your risk stays aligned with your goals. It is easy for your investments to get out of line with your risk tolerance when we experience double-digit growth in the stock market like in 2023 and 2024. The natural portfolio drift can skew your investments to be more heavily in stocks than in bonds. Remember, volatility is part of the ride, but history shows that patience is rewarded. Trust your plan, trust the process, and stay the course. Your financial plan is there to help lean on when the future is not always clear. It is important to have an investment portfolio that is designed to complement your financial plan. Thanks for watching. If you found this video helpful, be sure to like, subscribe, and share with anyone who might need a little reassurance during uncertain times. I’m Alex Wolfe and we’ll see you next time. you
