Handling Market Volatility
Conventional wisdom says that what goes up, must come down. But even if you view market volatility as a normal occurrence, it can be tough to handle when it's your money at stake.
Though there's no foolproof way to handle the ups and downs of the stock market, the following common sense tips can help.
Don't put your eggs all in one basket
Diversifying your investment portfolio is one way you could help reduce the effects of market volatility. Because asset classes often perform differently under different market conditions, spreading your assets across a variety of different investments such as stocks, bonds, and cash alternatives (e.g., money market funds, CDs, and other short-term instruments), has the potential to help manage your overall risk. Ideally, a decline in one type of asset will be balanced out by a gain in another, but diversification and asset allocation do not guarantee a profit and can't eliminate the possibility of market loss.