How to Stay Invested in Volatile Markets Without Losing Sleep

James Lee | Feb 20, 2025

1. Focus on Your Long-Term Goals

Short-term market moves can be loud, distracting, and sometimes downright dramatic. But here’s a little perspective: Do you remember the headlines from five years ago? How about ten? Probably not. That’s because short-term events rarely define long-term success.

Instead of getting caught up in the noise, think about why you invested in the first place:

Are you building a nest egg for retirement?
Saving for a dream home?
Making sure your kids don’t have to take on a mountain of student debt?

When you focus on the long game, today’s headlines feel a lot less urgent.

2. Maintain a Diversified Portfolio

Ever seen a circus performer walk a tightrope? Notice how they use a balance pole to stay steady? That’s what diversification may do for your investments.

By spreading your money across different asset types (stocks, bonds, real estate, and more), you’re avoiding putting all your eggs in one basket. If one area takes a hit, another might hold steady or even grow.

A well-diversified portfolio may help smooth out the ride and keep you from making decisions based on temporary market swings.

3. Emotion and Investing Don’t Mix

Think about the last time you made a decision in the heat of the moment. Maybe you sent an email you regretted or made an impulse buy that still has the tags on it. Investing based on emotions can have the same effect, except it could cost you more than a pair of shoes you’ll never wear.

Here’s how to stay grounded:

Avoid checking your portfolio daily. It’s like watching water boil – it only makes you more impatient. Instead, review it periodically.
Stick to your investment plan. Markets move. That doesn’t always mean your strategy should.
Consider working with a financial advisor. Having someone in your corner can make all the difference when uncertainty creeps in.

4. Keep a Cash Cushion

Having cash reserves can be a game-changer during market downturns. Why? Because it keeps you from having to sell investments when prices are down.

A good rule of thumb: keep 3-6 months’ worth of essential expenses in an emergency fund.¹ That way, if life throws you a curveball, you won’t have to dip into your investments to cover it.

5. Consider Dollar-Cost Averaging

Ever tried guessing the best time to buy into the market? It’s nearly impossible, even for the pros. That’s where dollar-cost averaging (DCA) comes in.

Here’s how it works: Instead of investing one big lump sum, you put in a set amount at regular intervals, whether the market is up or down.²

This approach:

Removes the pressure of trying to time the market.
Allows you to buy more shares when prices are low and fewer when prices are high.
Keeps you consistently invested; no second-guessing required.

6. Rebalance Your Portfolio When Necessary

Let’s say your original investment mix was 60% stocks and 40% bonds. After a big rally in the stock market, you might end up with 75% stocks and 25% bonds. That’s riskier than you originally planned.

Rebalancing helps you realign your investments with your goals. It might mean selling some of your winners and adding to areas that need a boost, kind of like trimming a tree to keep it growing strong.

7. Turn Off the Noise

The 24-hour news cycle thrives on drama. "The market is crashing!" "A recession is coming!" "Sell everything!" If you listened to every doom-and-gloom prediction, you’d never get a good night’s sleep.

While staying informed is important, constant exposure to negative news can lead to unnecessary stress.

Here’s a better approach:

Limit your financial news intake. Checking once a week is plenty.
Follow trusted sources with a balanced perspective. Not every hot take is worth your attention.
Focus on market fundamentals rather than sensationalized stories. Remember that headlines are designed to grab eyeballs, not provide level-headed investment advice.

8. Work with a Professional Who Gets It

A financial professional can help you create a personalized investment plan that aligns with your risk tolerance, goals, and time horizon. But more importantly, they’re there to help you stay the course when the going gets tough.

They can help you stay on track and provide a steady voice of reason when the market does what it always does – move.

Final Thoughts: Patience Pays Off

Market ups and downs are part of investing. But with a clear plan, a solid strategy, and a little perspective, you can ride out the storms and stay focused on what matters most: your long-term financial goals.

If you’re feeling unsure about your investments, let’s talk. A quick check-in with a financial professional can help make sure your plan is aligned with your needs so you can sleep better at night, no matter what the markets are doing.

NerdWallet, 2024 [URL: https://www.nerdwallet.com/article/banking/emergency-fund-calculator]
Investopedia, 2024 [URL: https://www.investopedia.com/terms/d/dollarcostaveraging.asp]

This content is developed from sources believed to be providing accurate information. The information provided is not written or intended as tax or legal advice and may not be relied on for purposes of avoiding any Federal tax penalties. Individuals are encouraged to seek advice from their own tax or legal counsel. Individuals involved in the estate planning process should work with an estate planning team, including their own personal legal or tax counsel. Neither the information presented nor any opinion expressed constitutes a representation by us of a specific investment or the purchase or sale of any securities. Asset allocation and diversification do not ensure a profit or protect against loss in declining markets. This material was developed and produced by Advisor Websites to provide information on a topic that may be of interest. Copyright 2025 Advisor Websites.

How to Stay Invested in Volatile Markets Without Losing Sleep