If you’ve been catching the headlines lately, you may feel like we’re all caught up in a whirlwind of uncertainty. Among tariff news, talk of an economic downturn, and choppy market movements, it can feel like there’s always something new to worry about — whether it’s at the grocery store or in your retirement account. Some clients have been reaching out recently, which is understandable.

My simple advice: Don’t panic. This is actually all a part of your financial plan.

Markets Fluctuate — That’s Their Job

Markets rise, markets fall, and they do so every day. The stock market is the crystal ball. It’s a place of debate where certainty and uncertainty put on the gloves and duke it out. What’s left is the value of industry. The expectations of the next move or series of moves in a company’s business trajectory and the economy in general all play a role.

Yes, tariffs and political uncertainties can shake the market and your confidence. But it’s important to remember that a well-constructed investment portfolio is designed with the knowledge — if not the expectation — that parts of it will fail. No one, at least prudently, has constructed a financial plan with the expectation that they will earn top-end stock market returns year after year and then just ride off into the sunset with a wagon full of still-compounding cash.

Your Portfolio Is Built With Risk in Mind

If you’re following along, you’ve already measured your appetite for risk. It’s your “risk tolerance.” You also understand the capacity you have to take on risk. That’s your “risk capacity.” Understanding that someone who is ready to let it ride on red — and that it’s also very unwise to do so with next month’s mortgage payment — is a good start to understanding the difference between risk tolerance and risk capacity. Together, these two inputs help you strike the right balance between how much risk you’re comfortable taking and how much risk you can afford to take. 

Using that information to pick the right mix of very risky and hardly risky investments is an intentional commitment to reaching lower highs so that you can also reach higher lows when markets do their thing. Incorporating stocks of differing company size and in different countries along with bonds and cash as a buffer from the volatility of stocks in general gives you a very good chance that something will simultaneously be going wrong and going right in your account(s) in any given day, week, month, or year.

Worried? Focus on These Three Things

If you’re feeling anxious about your investments because of market volatility or headlines predicting “the next big crash,” remember the following:

1. Stay the course.
   It actually means something beyond the cliche. You’ve already taken action by thoughtfully crafting a financial plan that accounts for market drops, economic shifts, and all sorts of wild stuff that feels uncomfortable in the moment. “Staying the course” doesn’t mean ignoring your money; it means not making emotional knee-jerk decisions. It’s time to let all of that planning shine!
2. Control what you can control.
   No one can truly predict which direction the market will go next. If you’re tempted to abandon your plan, ask yourself whether your feelings are driven by external noise or a genuine change in your life circumstances. Stick to the plan you built and revisit it as needed — but don’t revamp it out of panic.
3. Speak up if your circumstances truly change.
   If you’ve experienced a major life event, such as a shift in your health, a job change, or a different financial reality that adjusts your time horizon or financial needs, that’s the time to make an adjustment to your planning. It’s the right time to take action. Talk through your new circumstances and make sure you’re accounting for how they’ll impact not only your next move in your investment portfolio but also your entire financial plan.

My Favorite: It’s Time In the Market, Not Timing the Market

Get it? History shows that some of the best market days often follow the worst. If you’re frequently jumping in and out to dodge dips, you can miss these critical rebounds. For example, if you had invested $10,000 in the S&P 500 on January 1, 1988, you’d have about $418,000 if you stayed fully invested thorouh December 31, 2023. Miss just the five best days, and the amount you end up with drops to $264,000. Miss the 50 best days, and you’re at only $32,000 after all that time. Those best days rarely announce themselves in advance.

The Bottom Line: Keep Perspective

It’s easy to let day-to-day headlines cloud your long-term vision. Whether you’re a recent college grad or you’re ready to retire, it’s natural to feel uneasy if you’re bombarded with negative predictions or major political shifts. But when you have put in the financial planning work, risk is baked into your plan. It’s not a surprise. It’s actually all a part of your financial planning.

Remember:

• Your investment portfolio is one part of a financial plan built for your goals.
• A good investment mix will consider not only the amount of stocks and bonds but also how that mix is implemented across all of the various types of investment accounts available to you.
• Review your portfolio consistently — in good times and in bad — to make sure you’re still working toward the same goals with the appropriate resources.

Again, my simple advice: Don’t panic. This is actually all a part of your financial plan.