Don't let emotions guide your investments
With an ever-changing market environment, how do you guide your investment decisions?
Eileen St. Pierre, Oklahoma State University Cooperative Extension personal finance specialist, said a person's emotions can cause chaos with one's long-term financial plans.
"When the market plummets, some investors panic and start selling their stocks. When they do that, they are realizing those losses. The money disappears from their investment portfolios and never returns." St. Pierre said. "This behavior can interfere with long-term goals and damage financial plans."
During these tough times, work with a financial advisor to outline long-term goals, develop ways you can achieve these goals and set a plan to stick with when the market is faced with difficult periods.
Throughout history, stock investors have always experienced crises and uncertainty. St. Pierre said investors who understand this will be less likely to react emotionally and are more likely to stay the course over the long-term. These are the investors who are better positioned to benefit when the stock market picks back up.
"Be patient with your stocks," she said. "Periods of short-term volatility with stocks are expected. It's vital to keep in mind that when speaking historically, stocks have rewarded patient investors."
The market itself has shown to be resilient, despite challenges.
"It is hard to think long-term when you are bombarded with negative news on a daily basis. There are a lot of events that you cannot control such as when the market is going to bottom out. You need to focus on things you can control, such as your asset allocation (the mix of stocks and bonds in your portfolio) and the level of risk you are willing to bear," St. Pierre said. "We will eventually emerge from this crisis. Patient investors will benefit when we do."