Markets go up and markets go down: What you
should consider when youre along for the ride.
|Market Volatility - its a fact of investment life. However, quite recently, the ups and downs have been slightly more drastic than the usual winds were used to weathering. We saw a period of long steady rising in equity markets over the 1990s, and then a sharp downturn beginning in 2001 and exacerbated by the tragic events of September 11th and the accounting scandals.
So how do you cope? Thats up to your investment strategy, which is made up of your investment objectives, time horizon, risk tolerance and need for income and liquidity. Do these uncertain market times require a special strategy? Maybe. Just remember that - whatever you do - dont panic.
Emotions and investing dont mix. In times like these, its easy to get caught up in dramatic market swings. You may be better off both financially and emotionally investing on a regular basis with a longterm goal than trying to predict where the market is going on any given day. Jumping in and out of the market to avoid losses and increase short-term gains is known as market timing - its incredibly risky and often ineffective. If your objective is higher returns in the long run, you may need to accept greater short-term volatility as well. If you can ride out market swings, you may be positioned better to achieve your long-term investment goals.
Perhaps most important, you should consider having a diversified portfolio, You know the saying - dont put all your eggs in one basket. In other words, you may not want to invest in one industrys stocks or a single type of security; you may consider having a good mix of high and low-risk investments in stocks, bonds and money market investments that match your investment strategy. The more diverse your investment portfolio, the better you may sleep at night knowing that with the benefits of diversification, your investments may be able to weather the storm.
Remember to remain true to your original long- and short-term goals, as well as your time horizon and risk tolerance.
For more information on this and other financial topics, contact ING representative Tara Hagan at 1- 888-822-1211, extension 2017. Or visit us on www.ing-usa.co to read the market volatility Special Report, Bumpy Rides and Troubled Times.