Strategies to Help Deal with Market Volatility

A sudden drop in the market can have dramatically different implications for someone just starting their career compared to someone nearing retirement. What’s important is you understand your situation and your financial plan.

Your list of goals may include: saving for retirement, buying a house, starting a business, paying education costs for your children or charitable giving. But for each goal added to your list, you’ll need to precisely define its costs, time frame and priority. You’ll encounter a number of trade-offs as you start to prioritize and lay out a time line for your goals. Getting these details down on paper will allow you to create a solid financial plan. And that can help you get to where you want to go.

Short-term losses can trigger anxiety, but letting emotions drive your investment decisions may prove costly. One key to living with market volatility is focusing on long-term results rather than the daily bumps along the way. Staying the course can be difficult, but it can also create opportunities.

Diversification is a staple of investing. But as markets change, your portfolio may need to evolve. Times of volatility offer a great opportunity to reevaluate and possibly rebalance your asset mix.

Asset allocation can help you:

Reduce risk. Portfolio diversification may reduce the amount of volatility you experience by simultaneously spreading market risk across many different asset classes.

Improve your opportunity to earn more consistent returns over time. By investing in several asset classes, you may improve your chances of participating in market gains and lessen the impact of poor‐performing asset categories on your overall portfolio returns.

Stay focused on your goals. A well-allocated portfolio alleviates the need to constantly adjust investment positions to chase market trends, and can help reduce the urge to buy or sell in response to the market’s short-term ups and downs.

Don’t be passive in the face of volatile markets. After all, this is your money, and your future. Being comfortable with your plan and your portfolio are important, but so is knowing your tolerance for risk.

A Message from the CEO

To our clients:

Above all else, the coronavirus pandemic is a worldwide humanitarian issue, but it is also accompanied by significant economic fallout. Already, our personal and professional lives have been impacted in significant ways, and that impact will likely continue for the foreseeable future. We’ve carefully curated the most relevant resources on our Market Volatility Resources page to make it easier for you to find what you need. Given the fluidity of the situation, we will be updating it frequently. We hope these resources help you and your organization. In the meantime, stay healthy and safe.

-Jenny Johnson, CEO, Franklin Templeton

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