How to Handle Investing in a Market That Feels Like a Rollercoaster

They say March comes in like a lion and goes out like a lamb. In the context of the stock market, March has been a beast.

The month started off quiet enough. But as the Trump administration moved forward with tariff policies, markets reacted in a very strong way.

The S&P 500 reached correction territory on March 13. And with stocks continuing to slide, investors may be looking at a rocky year ahead.

At times this like this, it’s natural to get antsy — or even downright overwhelmed — about the impact of stock market volatility on your long-term plans. But you should know that if history tells us anything, it’s that things are likely to work out just fine in the long run.

Keep your eyes on the prize

If you’re a fairly new investor, recent stock market volatility may be causing you to lose sleep. But if you talk to more seasoned investors, they’ll probably tell you they’ve been here before.

In early 2020, the S&P 500 plunged 34% from its February high to its March low as the pandemic hit U.S. soil. At the time, investors were no doubt panicked — especially because the nation was dealing with an unprecedented health and economic crisis at the same time.

But if we look at the data, we see that now, five years later, the S&P 500 is up roughly 143% from March of 2020. This tell us that when stocks crash, the best thing to do is often nothing.

Don’t react, and stay the course

If you were to look at your portfolio value today compared to a month ago, you’d likely be seeing a drop. But one thing you must keep in mind is that if you hold your positions and don’t sell during a market downturn, you can avoid locking in losses.

What you may be seeing now is a loss on screen (or what the experts used to call a loss on paper). Market losses don’t become official until you make them official. So if you’re many years away from retirement, your best bet right now is to sit tight and wait things out.

That doesn’t mean you can’t buy discounted stocks that align with your investing strategy. But now’s not the time to unload stocks because they’re down broadly. There’s a very good chance your portfolio will recover ahead of retirement — and then some — if you just leave it alone.

That said, it’s important to make sure your portfolio is set up to withstand a prolonged market downturn. To that end, make sure your investments are well-diversified. And also, make sure your assets are allocated appropriately for your age.

If you’re within two years of retirement, it’s not the time to have 90% of your portfolio in stocks. If retirement is 30 years away, you’re in a different boat. You may want to work with a financial advisor for help rebalancing your portfolio, or even just evaluating it and making suggestions.

Remember, stock market volatility is common, and corrections where the market drops 10% or more are a normal part of the cycle. Your best bet, generally speaking, is to not react to short-term volatility.

If need be, bar yourself from checking your portfolio until things settle down. That way, you may be less likely to make rash financial decisions that hurt you in the long run.