Three Strategies to Help You Navigate the Market’s Ebb and Flow

There’s no doubt about it: The U.S. stock market can be volatile. But as any experienced investor will tell you, that’s just a fact of life in the investment world. The stock market’s performance has always come in cycles that include both ups and downs.

Still, knowing that the stock market will inevitably make waves doesn’t necessarily make them easier to stomach. But here are three strategies that might.

• Make Volatility Work for You — Establishing a systematic investment plan may actually help you take advantage of the price fluctuations of stocks. For example, by investing a set dollar amount on a regular basis — a strategy known as dollar cost averaging — you wind up buying a greater number of shares when the price is low and fewer when the price is high. Although dollar cost averaging doesn’t prevent losses in down markets, over the long term it may help you reduce the average cost you pay for shares to a level below the average price. And perhaps more important, it helps takes the guesswork and emotion out of your investment decisions.
• Think Long Term — Remember that despite short-term volatility, stocks have historically provided higher returns over long periods of time than other investments. Just as a baseball team can lose some games and still win the pennant, your investments don’t need to make gains every day — or even every year — to keep you ahead in the long run.
• Review Your Investment Mix Regularly — Your investment choices should be made based on your individual needs — your goals, time horizon, and risk tolerance. But those factors can change. Regular reviews of your investment portfolio — at least once a year — can help ensure that your choices still meet your needs and have you on track toward your goals.

Check with a financial professional to learn more about these and other strategies for dealing with today’s market conditions — and tomorrow’s.

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