5 Steps to Effectively Manage Today’s Market Volatility

By Ziyah Esbenshade, CFP®, APMA®, CRPC®

The year 2022 has presented challenges for investors, with stock markets experiencing significant volatility and bond markets showing unpredictable movement. Much of this can be attributed to external events. The most notable triggers are Russia’s invasion of Ukraine, an extended period of higher inflation, and a shift in monetary policy by the Federal Reserve. 


Times like these can cause anxiety for investors. As you watch markets move up and down, sometimes dramatically in a day, it’s natural to wonder whether it’s time to make changes to your investments. Before you do so, it’s important to think about your finances in the context of the broader picture and seek advice from a professional who can help you evaluate what actions, if any, you should take. Here are five tips to get started.


#1 – Don’t let daily events overly influence your decision making. It is easy to become overwhelmed with the headlines of the day, particularly if seemingly bad news is piling up and having a negative impact on the markets. Keep in mind that we’ve seen many periods where markets suffered sharp downturns. Yet historically, markets as a whole have always recovered any ground lost during short-term setbacks. Headlines come and go, but building an effective, long-term strategy should remain your primary focus.


#2 – Re-assess your risk tolerance. If you’re feeling uneasy about market volatility, you may need to take another look at the level of investment risk with which you are comfortable. Periods of market volatility are often a true test of the ability to withstand temporary setbacks to your portfolio. Another consideration is your time horizon. For example, if you are within five years of retirement, you may want to consider scaling back the level of risk in your portfolio to protect against the impact of a major downturn occurring at the wrong time – just when you need the money for retirement. 


#3 – Stay properly diversified. Once you’ve determined your risk tolerance, the next consideration is diversification. Maintain an appropriate balance of stocks, bonds, and other types of investments. In addition, make certain you don’t have a concentrated position. As a rule of thumb, no individual holding should represent more than 20% of your asset mix. This includes company stock you may hold in your workplace retirement plan.


#4 – Continue or expand systematic investments. While volatile markets can be concerning, they shouldn’t impact your ongoing investment plans. If you make regular contributions to your workplace savings plan or other accounts, it’s best to maintain those investments. If markets go down, your regular contribution will purchase more shares of the investment. That could benefit you over the long run. If you have the ability to save more through systematic investing, don’t be hesitant to boost those amounts you sock away regularly.


#5 – Review your strategy with your financial advisor. It can be helpful to discuss your financial situation in the context of today’s markets with your financial professional. They will be able to help you assess your current position, if your portfolio carries an appropriate level of risk and whether there may be investment opportunities you should consider today. Having a conversation about the best way to approach today’s markets can make a difference and can help keep you on track to achieve your most important goals.



Ziyah Esbenshade, CFP®, APMA®, CRPC®, is a Private Wealth Advisor and Senior Vice President with Pell Wealth Partners, private wealth advisory practice of Ameriprise Financial Services, LLC in Rye Brook, New York. She specializes in fee-based financial planning and asset management strategies and has been in practice for 20 years. To contact her, visit pellwealthpartners.com, call 914.253.8800 or visit our office at 800 Westchester Avenue, Suite 300, Rye Brook, New York 10573.