1. Fight the urge to peek (and panic)
Aside from the emotional torture of watching your long-term investments decline minute by minute, checking on your portfolio every hour on down days can lead you to make some less-than-rational decisions. Sure, everyone wants to buy low and sell high, but human nature can convince us to sell before “things get worse,” which is the exact opposite.
2. Stay invested in your convictions
See how the underlying businesses in your portfolio are doing. Are their earnings and revenue keeping pace with past years? Most successful stocks have drawn down by 50% or more at some point in their history,1 but great companies usually deliver good returns over the long term.
3. Harvest some tax losses
Sometimes, it’s smart to sell at a loss to offset profits you’ve made elsewhere. Every dollar you report as a loss helps reduce your taxable gain on something else. Even if you have no capital gains, the IRS lets you claim up to $3,000 in capital losses. If you have more than $3,000 in losses, you can carry that over for the following year(s).2
4. Shop for bargains
In real estate, they say you make your money when you buy, not when you sell. The same can be said for investments. An attractively priced equity bought today – and there are plenty of bargains in today’s market, if you know where to look – could be worth substantially more 10, 20 or 30 years from now, when it’s time to sell. One investor’s volatility is another’s opportunity.
5. Consider owning a non-correlated asset
When the equities markets are volatile, it’s refreshing to have a non-correlated asset that allows you to take advantage of opportunities as they continue to arise.
6. Above all, work with a financial professional you trust.
The right financial professional can help you see the holes and opportunities in your balance sheet. So, you can feel more confident and less anxious during times of market disruption.
1. Extreme Stock Market Performers: Expect Some Drawdowns, Hendrik Bessembinder/W.P. Carey School of Business, July 21, 2020
Guardian, its subsidiaries, agents and employees do not provide tax, legal, or accounting advice. Consult your tax, legal, or accounting professional regarding your individual situation.
Past performance is not a guarantee of future results. All investments contain risk and may lose value. Equities may decline in value due to both real and perceived general market, economic and industry conditions.
Pub11734 2022-141911 Exp. 8/24