Don't Get Conservative When Markets Get Volatile
Markets have been anything but steady lately. Sudden swings—both up and down—can leave even experienced investors rattled. When things feel uncertain, it's natural to want to protect what you have. But reacting to volatility by getting more conservative with your investments can backfire, especially when it comes to your long-term financial goals.
At Parkshore Wealth Management, we understand how unsettling this kind of environment can be—especially for those who are retired or nearing retirement. We believe the antidote is staying grounded, strategic, and focused on what you can control.
Here are some smart strategies to help you navigate market volatility with confidence:
1. Don’t Rush to Cash
When markets get bumpy, the instinct to flee to cash can be strong. But doing so can mean locking in losses—and potentially missing out on the recovery. While cash might feel safe, staying on the sidelines can leave you vulnerable to inflation and long-term underperformance.
Instead, remember that short-term volatility is part of investing. Sticking with your plan, even when it’s uncomfortable, is often the most effective path forward.
2. Revisit (Not React to) Your Risk Tolerance
Feeling uneasy is a signal worth listening to—but not overreacting to. If recent market moves have you questioning your investment choices, take the opportunity to revisit your risk tolerance and long-term strategy.
Are you invested in a way that reflects your goals, time horizon, and comfort with risk? Have you balanced your risk and return needs? A thoughtful conversation with a financial advisor can help you feel more assured that your portfolio is aligned with your needs—without making impulsive decisions.
3. Rebalance Your Portfolio
Volatility often pushes parts of your portfolio out of balance. Stocks may fall while bonds hold steady, changing your overall mix. Rebalancing brings your allocation back to target, often by buying lower-priced assets—a disciplined way to “buy low” without chasing trends.
This is one of the most practical, long-term strategies for keeping your investments aligned with your financial plan.
4. If You’re Near or In Retirement, Focus on Your Income Plan
Volatility can feel particularly stressful for retirees or those within a few years of retirement. Unlike younger investors, you may not have decades to wait for markets—and your portfolio—to fully recover.
On top of that, if you're relying on your portfolio to generate income, the last thing you want is to sell assets when values are down. Doing so can lock in losses and shrink your future income potential.
That’s why having a clear, intentional income strategy is important. This often includes maintaining a reserve of cash or short-term bonds to cover near-term living expenses. With this kind of cushion in place, you can avoid selling growth-oriented investments during a downturn—and give your portfolio more time to recover.
5. Take Advantage of Tax-Loss Harvesting
Market volatility can present opportunities—especially when it comes to taxes. If some of your investments are temporarily down, you may be able to sell them, harvest the loss, and use it to offset gains elsewhere in your portfolio.
This can be a smart way to reduce your tax bill while staying invested. Just be sure to work with an advisor to avoid pitfalls like the wash-sale rule.
6. Keep Contributing—You’re Buying on Sale
If you’re still working and contributing to a 401(k), IRA, or brokerage account, market dips are actually an opportunity. Lower prices mean your money buys more shares—potentially boosting future growth.
Rather than pausing contributions, stay consistent. Over time, this disciplined approach is one of the most effective ways to build wealth.
7. Work with a Fiduciary, Fee-Only Advisor
When markets are volatile, it’s easy to get overwhelmed by the headlines. That’s when a clear, objective perspective becomes even more important.
A fiduciary, fee-only advisor—like Parkshore—can help you make thoughtful decisions rooted in your goals, not emotions. We’re legally and ethically obligated to act in your best interest, and we don’t earn commissions, so our priority is your success.
Final Thoughts
Market volatility is part of the investing journey. While it’s never comfortable, how you respond matters. Instead of pulling back or getting too conservative, use these moments to check in on your plan, rebalance where needed, and keep a long-term mindset.
If you’re feeling uncertain, let’s talk. At Parkshore Wealth Management, we’re here to help you stay focused, confident, and aligned with what matters most—no matter what the markets are doing.
Schedule a complimentary, 15-minute chat with a fee-only, fiduciary financial advisor today to discuss your personal situation.
This material was written in collaboration with artificial intelligence (ChatGPT) derived from sources believed to be accurate. This information should not be construed as investment, tax, or legal advice.
Parkshore Wealth Management is a family-owned, independent, fee-only Registered Investment Advisor with offices in Granite Bay and Folsom, CA, and Lehi and Logan, UT. We partner with financially responsible individuals and families who are eager to take positive steps that will allow them to use their money to build the life they desire. The firm is led by Harold Anderson, CFP®, and Daniel Andersen, CFP®, both members of NAPFA, the country’s leading professional association of fee-only financial advisors.