This article was reviewed by Jay Brecknell, CFP®.
What You’ll Learn in This Article:
- How to invest wisely during market volatility
- Tips for long-term investment planning
- How to manage risk and cash flow in uncertain markets
- Why diversification and discipline drive better financial outcomes
Sometimes the market landscape may feel uncertain, with terms like “volatility” and “instability” frequently appearing in headlines, newsfeeds, and inboxes. However, experienced investors will understand that market fluctuations are a normal part of the investment cycle. These periods of change, while sometimes uncomfortable, are not cause for alarm. Staying focused on long-term goals and avoiding reactive decisions—like panic selling—is key to a successful investment strategy.
It’s common to see some of the strongest and weakest market days occur within the same period, even within the same month. Missing just a few of those positive days can significantly impact your long-term returns, and the reality is, market volatility is just part of the investment journey. Rather than trying to time the market, it’s more effective to stay the course with a well-structured plan. Market volatility will happen at some point, and you need to be prepared to ride it out. How? We’re going to help.
How to set up your investments for success
The best way to support long-term investment success is to plan intentionally. One of the most effective ways to prepare for market volatility is by maintaining a well-diversified asset mix.
Different types of investments respond to market conditions in different ways. A diversified portfolio can help reduce your exposure to any single area of the market, providing balance when conditions shift. While some assets may be more affected during periods of volatility, others may remain stable—or even perform well—helping to smooth out your overall returns over time.
How to prepare for a volatile market
A key part of navigating market volatility is understanding both your emotional comfort level and your cash flow needs and planning accordingly.
Emotional Needs
This relates to your risk tolerance. It influences both the types of investments you hold and the size of the safety net you may need to feel secure during periods of market fluctuation. Knowing and investing according to your emotional needs can help you stay invested without making emotionally driven decisions that could derail your long-term plan.
Cash Needs
This is the amount of money required to support your lifestyle over an extended period. At Cedar Rock, we generally recommend keeping one year’s worth of expenses accessible, along with any additional funds earmarked for planned purchases, such as a new vehicle, RV, or vacation property.
Having this kind of buffer—ideally in a high-interest savings account—can prevent the need to sell investments during market downturns. Just as importantly, it provides peace of mind, knowing your day-to-day financial needs are covered regardless of market conditions.
Block out the noise
Staying informed is important, but staying too connected to daily market headlines can do more harm than good. News outlets and social media platforms often thrive on sensationalism, and constant exposure to market noise can lead to unnecessary stress and anxiety.
To stay informed without becoming overwhelmed, consider the following:
- Set time limits for how often you check market updates
- Rely on a few trusted, reputable sources for accurate information
- Avoid the urge to scroll through social media for financial news
- And most importantly, lean on your financial advisor for perspective and guidance
A steady, long-term approach will always serve you better than reacting to short-term headlines.
The best advice during market volatility: stay the course
Living in B.C., many of us enjoy getting outdoors—whether it’s camping, hiking, or skiing. And when you’re out in nature and a storm rolls in, the best course of action is often to find shelter and wait it out. The same principle applies to market volatility: stay the course.
It’s natural to feel uneasy when conditions become uncertain. But just like trying to flee a storm can put you at greater risk, making impulsive investment decisions during market downturns can do more harm than good. Selling out of fear often locks in losses and disrupts long-term plans.
For long-term investors, it’s important to remember that your portfolio was built with strategy and purpose. Trust in the plan, trust your advisor, and stay focused on your long-term goals, rather than reacting to short-term fluctuations.
In conclusion
Market volatility is a matter of if, not when. Planning for market volatility by setting your asset mix to be diverse–while keeping in mind your emotional needs–and ensuring your cash needs are planned for is best practice to make instances of market volatility more tolerable. There is always some risk when investing, but just as you would hunker down in a storm, the best thing to do during a volatile market is to stay the course. It’s only a matter of time before the market levels out, and when it does, you’ll be glad you held on.
Disclosure
ACPI is regulated by the Investment Industry Regulatory Organization of Canada (www.iiroc.ca) and a Member of the Canadian Investor Protection Fund (www.cipf.ca). Jay Brecknell and Chris Singer are registered to advise in (securities and/or mutual funds) to clients residing in BC.
This publication is for informational purposes only and shall not be construed to constitute any form of investment advice. The views expressed are those of the author and may not necessarily be those of ACPI. Opinions expressed are as of the date of this publication and are subject to change without notice and information has been compiled from sources believed to be reliable. This publication has been prepared for general circulation and without regard to the individual financial circumstances and objectives of persons who receive it. You should not act or rely on the information without seeking the advice of the appropriate professional.
Investment products are provided by ACPI and include, but are not limited to, mutual funds, stocks, and bonds. Non-securities related business includes, without limitation, fee-based financial planning services; estate and tax planning; tax return preparation services; advising in or selling any type of insurance product; any type of mortgage service. Accordingly, ACPI is not providing and does not supervise any of the above noted activities and you should not rely on ACPI for any review of any non-securities services provided by Jay Brecknell.
Any investment products and services referred to herein are only available to investors in certain jurisdictions where they may be legally offered and to certain investors who are qualified according to the laws of the applicable jurisdiction. The information contained does not constitute an offer or solicitation to buy or sell any product or service.
Past performance is not indicative of future performance, future returns are not guaranteed, and a loss of principal may occur. Content may not be reproduced or copied by any means without the prior consent of the author and ACPI.
Jay Brecknell and Chris Singer are Certified Financial Planners in BC. This material is prepared for general circulation and may not reflect your individual financial circumstances. Jay and Chris can be reached at cedarrockfinancial.com.