10 Ways to Stay Sane in a Crazy Market

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Keeping your cool can be hard to do when the market goes on a roller-coaster ride. It’s useful to have strategies in place that prepare you financially and psychologically to handle market volatility. 

1) Have a game plan
Having predetermined guidelines can help prevent emotion from dictating your decisions. Use diversification to try to offset the risks of certain holdings. Diversification can help you understand and balance your risk in advance.

2) Know what you own and why you own it
When the market goes off the tracks, knowing why you originally made a specific investment can help you evaluate whether your reasons still hold. Understanding how a specific holding fits in your portfolio can also help you consider whether a lower price might actually represent a buying opportunity.

3) Remember that everything’s relative
If you’ve got a well-diversified portfolio that includes multiple asset classes, it could be useful to compare its overall performance to relevant benchmarks. If you find that your investments are performing in line with those benchmarks, that realization might help you feel better about your overall strategy.

4) This too shall pass
The financial markets are historically cyclical. Even if you wish you had sold at what turned out to be a market peak, or regret having sat out a buying opportunity, you may well get another chance at some point.

5) Learn from your mistakes
Anyone can look good during bull markets; smart investors are produced by the inevitable rough patches. If an earlier choice now seems rash, sometimes the best strategy is to take a tax loss, learn from the experience and apply the lesson to future decisions.

6) Continue saving
Even if the value of your holdings fluctuates, regularly adding to an account designed for a long-term goal may cushion the emotional impact of market swings. If losses are offset even in part by new savings, your bottom-line number might not be quite so discouraging.

7) Use cash to help manage your mindset
Cash can enhance your ability to make thoughtful decisions instead of impulsive ones. If you’ve established an appropriate asset allocation, you should have resources on hand to prevent having to sell stocks to meet ordinary expenses. 

8) Remember your road map
Solid asset allocation is the basis of sound investing. One of the reasons a diversified portfolio is so important it that strong performance of some investments may help offset poor performance by others.

9) Look in the rear-view mirror
Though past performance is no guarantee of future returns, the market’s long-term direction has historically been up. Remember: having an investing strategy is only half the battle; the other half is sticking to it. 

10) Take it easy
If you need or want to adjust your portfolio during a period of turmoil, do so gradually.

Test the waters by redirecting a small percentage of one asset class into another, or put any new money into investments you feel are well positioned for the future, but leave the rest as is.

Prepared by Broadridge Investor Communication Solutions, Inc. Copyright 2016.

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