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Investing Not Always Smooth Ride

Last updated on Wednesday, September 14, 2011

(BEDFORD) - Recent volatility in the global markets may cause even the most seasoned investors to fell shaken up, said Bart Trumpey, an Edward Jones financial advisor in Bedford.

Short-term market turbulence can serve as a reminder that investing in not always a smooth ride.

"It's natural to feel nervous when your investments look like they're losing altitude, but it's important to stay the course," Trumpey said. "The best response to market fluctuation is to keep your emotions and your investment strategy steady."

Trumpey offers some perspective on how to keep "white knuckles" at bay during turbulent times:

* Stock market declines are a normal part of investing. According to recent research, the Dow Jones Industrial Average has dipped by five percent on average 3.4 times a year. Bigger drops occur less frequently, with corrections (10 percent or more) once a year and bear markets (20 percent or more) every 3.5 years. Volatility happens regularly and is no reason to sell a quality investment.

* Bailing out is not the best reaction. So me investors might react by jumping in and out of the market, which can significantly impact investment performance. Historically, the best days often follow the worst days. While no one can predict what will happen in the future, getting out of the markets after the drops may mean missing any potential recoveries.

* In investing, switching to the relative stability of a short-term investment can place your long-term goals at risk. Volatility in the market, should not change your goal of retiring at a specific age or providing for your child's education.

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