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That said knowledge is your best friend.
Fear during market turbulence is natural but often leads to poor financial decisions, Salahi said.
He noted this fear-driven behavior can significantly erode wealth over time.
One of my clients exemplifies the power of overcoming this fear.
She resisted selling her investments during the 2020 market crash despite a 30% portfolio drop.
Her portfolio recovered and grew by 45% over the next 18 months by sticking to her long-term strategy.
Below are actionabletips to conquer fear during market downturns.
Understand Market History
Educate yourself on past market cycles, Salahi advised.
He said this historical perspective can provide comfort during downturns.
However, he said knowledge is your best friend.
You cannot completely divorce risk from return.
This can happen at various points during the year.
That means that on average, a bear market historically only takes 12 months to recover from.
According to Favorito, understanding the data can ease your nerves when those periods of volatility happen.
Investors often assume that they dont have enough time to recover.
There is an old saying when it comes to investing.
Never bet on the end of the world, because its only going to happen once.'
Implement a Robust Asset Allocation Strategy
Salahi advised diversifying your portfolio across various asset classes.
A well-diversified portfolio can help mitigate losses during market downturns.
Remember, time in the market beats timing the market.
Maintain an Emergency Fund
Keep three to six months of living expenses in aliquid, low-risk account.
Reframe Your Perspective
Salahi advised viewing market downturns as opportunities rather than threats.
Warren Buffett famously advised to be fearful when others are greedy and greedy when others are fearful.
Many of historys most excellent wealth-building opportunities have occurred during market lows.
Conduct Regular Portfolio Reviews
Quarterly reviews help ensure your investments align with your goals and risk tolerance.
Experts say this proactive approach can boost confidence in your strategy during turbulent times.
He said this strategy can help you save on taxes while maintaining market exposure.
Seek Professional Guidance
A financial advisor can provide objective advice and emotional support during market volatility.
Practice Mindfulness
Techniques like meditation can help manage stress and prevent emotional decision-making.
Even 10 minutes of daily meditation has been shown to reduce anxiety and improve decision-making under pressure.
Set Realistic Expectations
Understand that market volatility is average, Salahi explained.
Expect your portfolio to experience periodic declines of 10% or more.
This mental preparation can help you stay calm when downturns occur.
Use a Bucket Strategy
Salahi recommended dividing your portfolio intoshort-, medium- and long-term buckets.
Knowing you have cash and stable investments for near-term needs can help you tolerate volatility in your long-term investments.
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