Managing Investment Stress During Market Volatility
Laurence Hale, AAMS®, CRPS®
Principal/Managing Partner, Investment Advisor & Chief Investment Officer
For millions, the financial impact of recent events like the pandemic, the war in Ukraine and ballooning inflation have served as a source of distress and worry. This rings true in particular for investors of all kinds. Market volatility is high and the future, as always, is uncertain.
But feeling hopeless about an unpredictable stock market certainly isn’t any help. If you’re one of many worrying about investments, here are some dependable ways to reduce stress and make a plan for moving forward.
Prioritize Your Mental Health
Psychological professionals have long acknowledged the detrimental effects of stress. It impacts sleep, cognition and overall physical health.1 In times of financial as well as social uncertainty, it’s important to first regulate your mental wellbeing; high stress levels actually change human perception, increasing the likelihood of impulsive decision-making.3 Due to this, it’s wise to consider certain stress-managing lifestyle changes before making any big investment-related decisions.
Reduce Stress Without Changing Your Finances
Stress makes us feel as if we’re losing control. This is why it’s vital to take control of your lifestyle, independent of finances, wherever you can. The following suggestions have been proven to have positive effects: 2
Focus on wellness.
They’re timeworn suggestions, but they work: exercise regularly, get enough sleep, eat well and practice mindfulness. Allocate time to engage in recreational activities that make you happy, or explore a new hobby.
Don’t use unhealthy coping mechanisms.
These can be harder to recognize than one might expect. Don’t smoke or drink in excess to cope with stress, but also be wary of overworking yourself or unnecessary risk-taking.
Stay socially connected.
Social support increases resilience to stress.3 Experiencing the combined effects of financial stress and social distancing measures from coronavirus makes people susceptible to feelings of isolation. Lean into your support system and connect with others to avoid feeling consumed by anxious thoughts.
Approaching the Volatile Market
While all of the aforementioned actions can help you handle stress, it’s impossible to truly do so without addressing the stressor: the worry you have about your investments. The first step is to accept what’s happening economically. That doesn’t mean investors have to live in a constant state of stock-induced anxiety, although it can be difficult not to. When dealing with the stock market during volatile times, keep these guidelines in mind.
Take a Break:
Over-checking your portfolio is ill-advised in general and even more so during market downturns. For most, investing is a long-term proposition. Constantly checking your investments is not only unnecessary but often a source of aggravated stress - the same goes for over-consuming news about the stock market. This can increase the chance of making hasty, emotionally-driven decisions. It may be in your best interest to momentarily step away from your investments in order to gain perspective.
Assess Your Investing Goals:
While you should avoid over-checking it, seasons of volatility are a great time to reassess your portfolio and remind yourself of your long-term goals. Why is your portfolio made up of these specific investments? Why are you investing in the first place?
Despite a dynamic stock market, it’s probable that investors’ long-term goals remain unchanged. Keeping yourself conscious of these long-term returns is crucial; remember that your investment plans will outlast a period of market volatility.
Making Investment Decisions:
If you have a financial advisor, talk to them about your concerns. If you don’t have an advisor and think it’s time to work with one, now’s an opportune time. Our team at Weiss, Hale & Zahansky Strategic Wealth Advisors can help you to build a solid financial plan using our strategic Plan Well, Invest Well, Live Well process so that you can stress less and feel confident that you’re always doing all you can to reach your goals. Contact us to get started.
No matter your circumstances, the fundamental piece of advice is to avoid making an uninformed decision. Patiently observing your losses isn’t easy - but note that as bear markets average losses of 33 percent, bull markets are much longer in duration and come with average gains of 159 percent.4
Remember that, historically, the stock market has recovered.5 Bear markets are a normal part of investing. It’s hard to see an upside as anxiety spreads amongst investors. It’s understandably stressful when you feel the security of your investments is threatened - but don’t allow a volatile market to cause you too much
Presented by Principal/Managing Partner Laurence Hale, AAMA, CRPS®. Securities and advisory services offered through Commonwealth Financial Network®, Member FINRA/SIPC, a Registered Investment Adviser. 697 Pomfret Street, Pomfret Center, CT 06259, 860.928.2341. http://www.whzwealth.com These materials are general in nature and do not address your specific situation. For your specific investment needs, please discuss your individual circumstances with your financial advisor. Weiss, Hale & Zahansky Strategic Wealth Advisors does not provide tax or legal advice, and nothing in the accompanying pages should be construed as specific tax or legal advice.
1 https://www.stress.org/stress-effects
2 https://www.apa.org/topics/manage-stress
3 https://www.ncbi.nlm.nih.gov/pmc/articles/PMC2921311/
4 https://www.invesco.com/us-rest/contentdetail?contentId=049233173f5c3510VgnVCM100000c2f1bf0aRCRD&audienceType=investors
5 https://www.statista.com/chart/21144/s-p-500-recession-recovery/