Coping with the Ups and Downs of the Stock Market

By definition, the stock market is always changing. One day it's up, the next it's down. Or it may be up for years, and then suddenly start falling. The only thing that's guaranteed about the stock market is that it will change. But sometimes it can be hard to cope with all of these ups and downs, especially if you worry that the down periods will affect your plans for retirement, buying a home, saving for college, or other financial goals.

A stock market with lots of ups and downs can cause anxiety, fear, and worry. That's why it's important to consult with a financial planner to develop a plan that will carry you through the ups and the downs, and to also come up with your own plan to cope with both the financial and the emotional fallout from a uncertain market.

Talking to your Selectpath advisor
When the stock market is down, many people read their RRSP or other investment statements, see how much money they are losing, and decide to stop investing. While this is a normal reaction, it's not always the best option. It's important to talk to your Selectpath advisor before making any decisions about your savings and investments. An advisor can help you do many things, including

1. re-allocate your RRSP and investment accounts to create a lower-risk portfolio
2. develop a long-term plan that will allow for ups and downs in the stock market
3. think about your short and long-term goals and create a strategy for achieving them
4. determine the actual impact a volatile market has had on your investments

You may also find it helpful to think about how much risk you can handle emotionally. In recent years, many investors expected that the solid returns from the stock market would continue well into the future. When markets fell, they discovered the true meaning of the old adage "What goes up, must come down". If you are heavily invested in the stock market, you should be prepared for the possibility that your investments will drop in value at some point. If the idea of losing money causes too much worry or puts you at financial risk, you may want to talk to your financial planner about adjusting your investments to match your financial and emotional ability to take on risk. Try to remember that the stock market isn't the only investment option available; there are other ways to invest your money, such as bonds or paying down a home mortgage.

Coping with the emotional aspects of an uncertain stock market
The ups and downs of the stock market can be hard to deal with on an emotional level. Many people worry about how they will provide for their families, pay for college, retire, or reach other goals during a market downturn.

It's important to learn some ways to cope with these strong emotions because it's easy to let worry about your financial situation affect other areas of your life by making you feel stressed in general. Here are some ideas for coping with a volatile stock market:

1. Try to remember that you cannot control the market. The truth is, no matter how much you worry, there's nothing that you can do to change the financial markets. Try to concentrate on the things you can control, such as reviewing your investments with a financial planner or curbing your spending for a little while to create an emergency fund. Remember that the stock market has fluctuated throughout history, but it has always recovered.
2. Have you got a financial plan, or are you just investing / speculating? This may seem odd, but many people confuse the terms "financial planning" with "investing". Financial plans go well beyond investments. Done properly, they are really a process for achieving your financial goals. A good financial plan will actually help reduce stress as it takes into account your entire financial picture and prepares you for market downturns before they happen.
3. If news about a negative financial climate makes you worry, try to avoid it. During a market downturn it may seem like every newspaper and broadcast is about the falling market and how people are losing money. If you find that this kind of news makes you feel nervous, try to limit how much financial news you read, listen to, or watch.
4. Learn some ways to cope with anxiety and stress. It's important to learn some techniques that will help you relax during times of stress. This could include yoga, practicing deep breathing exercises, or simply increasing the amount of sleep and physical exercise you get. It doesn't matter what you do to relax, what's important is that you find something that works for you.
5. Try to remember all of the other forms of wealth you have in your life. Focus on relationships with your friends and family, your emotional and physical well-being, and other positive things in your life instead of worrying about your financial situation.
6. Try to live one day at a time instead of worrying about what may happen in the future. Many people find that making a conscious effort to focus on the "here and now" instead of thinking about the future can help calm financial fears.