Staying On Track When Markets Are Uncertain

Article Summary

• • Changes in the stock market are common and expected. Long-term results, however, generally bend toward growth.
  • Risk tolerance refers to a person’s emotional response to changes in the stock market, while risk capacity analyzes an investor’s financial ability to withstand risk.
  • Financial advisors can help you determine your capacity for risk, help you create a long-term plan, and ultimately guide you through volatile times.

The stock market can be sensitive. Experts who score the market’s health use more provocative terms to describe conditions, dropping in words like “volatile,” “correcting” and “crashing,” which can certainly raise alarm.

But, there’s also “rally” and “bull,” terms that soften nerves for onlookers concerned about how their investments are performing.

Regardless of the language that is used to describe the stock market’s ups and downs, anyone investing in the market has a habit of checking in on its health from time to time, especially when it makes headlines. Markets can move through a range of conditions over time. While most people experience nothing but joy following a rally or during a bull market, the opposite can be true when investing during market volatility.

It leaves investors re-evaluating their plans during a downturn, checking in on their long-term investment strategies, and generally feeling a sense of unease about the potential pitfalls that may come.

After all, investments carry with them a level of risk.

Investment Planning For Uncertainty

Past performance does not guarantee future results. Data indicates that over long periods, stocks have sometimes outpaced inflation, though results vary and losses are possible.

Some investors focus on long-term objectives, depending on their circumstances. The market is prone to losses here and there, and even significant dives, like the losses experienced during the COVID-19 pandemic. Outcomes vary, and long-term results depend on the asset, timing and individual circumstances.

Common planning considerations may include consulting with an expert. Some investors find it helpful to discuss goals, time horizon, and risk preferences with a licensed professional.

Risk Tolerance vs. Risk Capacity

When you’re seeking personalized investment advice, nothing is more unique than an individual’s risk tolerance and risk capacity. Despite sounding similar, they’re two different concepts.

Risk tolerance refers to a person’s emotional willingness or comfort with risk. Risk capacity is more concrete and less subjective, dealing with an individual’s financial ability to experience risk.

Risk preferences can differ by person and may change over time, including around retirement. Some individuals adjust risk exposure as timelines change. And different investments have different risk and return profiles.

A qualified professional can explain the tradeoffs that may apply to a particular situation.

There is no one-size-fits-all approach to investing. Experts on the Svvy® network, who you can get matched with based on your specific needs, may be able to help clients evaluate options based on your goals and constraints.

Investment Help For Women

At Svvy®, we understand that market volatility can create a sense of unease for some. We also understand the value that comes with our financial advisor matching services, designed specifically for women.

Our focus on matching women with trustworthy financial advisors is rooted in a desire to create more informed decision-making for women. Working with a qualified advisor who understands your goals and your level of risk, may help some women feel more prepared to weather the many moods of the stock market.

Svvy® can connect you with a female-vetted financial professional based on the information you provide.

Disclosure: This content is provided for general educational purposes only and does not constitute individualized investment, legal, or tax advice. Svvy® acts solely as a solicitor and connects and matches individuals with independent third-party financial professionals through a quiz-based matching process on the Svvy® Network (e.g., registered investment advisers and/or broker-dealers, as applicable). Matching is based on information provided through Svvy’s platform and does not constitute any advice. Any advice, recommendations, and services are provided only by the independent professional you choose to engage.