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Combatting doubt, fear, and panic selling

by | Jan 22, 2012 | OTHER, SELF-PUBLISHED

Q – Should I be redeeming my mutual funds to protect my investments in this volatile time? – Jim B., Strathroy, Ontario

A – Not necessarily. First of all, don’t panic! Markets fluctuate and regularly experience periods of volatility. During especially uncertain periods, as we’ve seen recently, it’s best first of all to review your financial plan and revisit your investment objectives to ensure your investment portfolio is still in line with your goals. If it is, then ride out the storm.

In periods of strong volatility and economic uncertainty, it may be difficult emotionally to stick to your plan and stay invested. But remember, panic selling will only leave you with more doubt and fear – doubt that you’ve done the right thing when markets take off again (and they will), and fear that you’ll lose out on the biggest gains, which typically occur early in a rally. Buying and selling when markets gyrate wildly only incurs extra trading costs, creates possible tax issues, and dampens your overall longer-term returns. But if you have a solid investment strategy and a good advisor, trust them to do their job.

If you are a self directed investor, you will need to keep your wits about you and stay focused on the long term. Investing is a lifelong process, and if you were to sell every time the markets corrected, the chances of getting back in just before a rally, recovery, or bull market are slim.

Investing takes knowledge and patience. Be calm, stay educated, and make decisions only when you have weighed the pros and cons and are ready to be accountable for the outcome. If you are not sure you are holding the right asset mix and feel that you are overexposed to equities, consult and qualified advisor. – R.T.

© 2023 by Robyn K. Thompson. All rights reserved. Reproduction without permission is prohibited. This article is for information only and is not intended as personal investment or financial advice.

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