Feeling Uncertain About the Markets? Staying Grounded in a World of Change
In today’s world of instant news and the “always-on” nature of social media, the world feels smaller than ever. A political tremor in one corner of the globe can send ripples through markets thousands of miles away. It’s normal to feel worried or confused when your financial future seems tied to things far beyond your control.
Taking a step back, understanding the bigger picture, and having a plan in place can make a world of difference. It’s not just about understanding how markets work but also feeling supported and informed through the ups and downs. By staying calm and focused, you can navigate uncertainty and keep your financial goals in sight, no matter what’s happening globally.
Acknowledge the Uncertainty
Financial worries go beyond just numbers—they’re deeply tied to your values and what really matters to you. From protecting your family’s future to securing your retirement and maintaining a sense of security, it’s natural to feel anxious when the world around you changes so quickly.
The first step is to acknowledge that it’s okay to feel uncertain, stressed or anxious. Ignoring or minimizing these concerns only adds to your stress. By recognizing these emotions, you begin to address them, reduce anxiety and make room for productive conversations about how to move forward with a thoughtful, well-rounded plan.
By creating a strategy that works for your unique situation, you can navigate uncertainty with a clear head. It’s about considering your long-term goals, making informed choices, and finding peace of mind in knowing you have a plan to weather challenges.
Focus on What You Can Control:
As the Greek philosopher Epictetus once said, “We cannot control the external events around us, but we can control our reactions to them.” This idea is a powerful reminder that, even when the world feels uncertain, there are steps you can take to feel more in control of your financial future.
Here are a few strategies that can help you navigate these challenging times with confidence:
• Review your plan: Take a moment to revisit your financial goals. Are they still in line with your current situation? Are there any adjustments you should consider due to changes in the economy? Is your portfolio diversified – meaning, are you investing in different assets or are all your eggs in one basket? Reviewing your plan regularly helps you stay in control, even when the world around you feels unpredictable.
• Reassess your comfort with risk: It’s natural for your comfort level with risk to change over time, especially in response to global events. What seemed manageable a year ago might feel riskier now. Take the time to reflect on your risk tolerance and make sure your investments are aligned. Learn more about Investment Risk.
• Get professional advice when needed: If you’re feeling uncertain about your next steps, consider seeking advice from a registered financial professional. A trusted advisor can help you stay focused on your long-term goals and avoid making decisions based on short-term emotions. Before handing over any money or personal information, check our website to make sure the financial professional you are considering is registered in New Brunswick. If you prefer a DIY approach, make sure to use reliable, unbiased resources—visit our website to learn more about Investing and Investment Trends.
Think Long-Term
History has shown that, while we can’t predict how long a stock market downturn or recovery will take, even after some of the most challenging economic times, markets eventually do recover. Market volatility is a normal part of the financial landscape, and so is the stress and uncertainty that goes along with them. How severe might my losses be? How long will this downturn last? Will my investments recover? This can all take a toll and trigger some emotionally driven decision making.
“Loss aversion bias” means we feel the pain of losing money much stronger than the joy of gaining the same amount. In the context of market volatility, when the market drops, our fear of further losses triggers a much stronger emotional reaction than the positive feeling we experience during market gains. This emotional response to loss can over-ride otherwise rational decision-making and ultimately harm financial well-being. Instead of sticking to a well-thought-out and long-term investment strategy, this fear of loss may drive investors to:
- panic sell when prices drop to avoid further losses, but effectively locking in losses and potentially missing out on future recovery
- hold onto losing investments for too long hoping they’ll recover, even when the rational decision would be to cut losses and reinvest elsewhere
- incur increased transaction costs due to frequent trading, eating into investment returns
Working with a registered financial advisor can help bring objective guidance and an unbiased perspective to the discussion to help ensure you’re acting on a strategy that’s best for your portfolio and investment goals.
Take Care of Your Well-being
Stress can take a real toll on both your mind and body, and financial concerns are a major source of stress for many people. That’s why it’s important to prioritize not only your financial health but also your mental and physical well-being. When life feels uncertain, don’t hesitate to seek help from others. If you're feeling overwhelmed by your finances, consider reaching out to local resources, such as financial counseling services, or explore financial wellness programs that can offer support and guidance.
Taking control of your financial future is empowering, but it’s also crucial to remember that your well-being matters too. By focusing on strategies that help you feel confident about your finances, maintaining a long-term outlook, and seeking support when needed, you can reduce stress and stay on track to achieve your financial goals.