Worried About a Volatile Stock Market in 2024? Do These Things


It would be fair to say that the very start of 2024 was a rocky one from a stock market perspective. The new year began with a selloff, and major stock indexes fell to ring in 2024.

Stocks have since rallied, though. And as of this writing, the S&P 500 index, which is generally used as a measure of the stock market on a whole, is up 2.37%.

But all told, January has been a pretty wild month. And we could be in for 11 more as 2024 rolls along. If you’re someone who’s worried about a perpetually volatile stock market this year, here are some key moves to make.

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1. Diversify your portfolio

A portfolio that’s loaded with stocks across different sectors of the market could easily rise and fall this year. But if you’re well-diversified in your brokerage account, then you may be less likely to see your portfolio lose a lot of value if a particular corner of the market takes a hit.

If you own a lot of different stocks, take inventory and assign each one a sector, such as tech, automobiles, retail, energy, and so forth. If any single sector represents more than 25% to 30% of your portfolio, it’s a sign that you may be due for some rebalancing.

2. Plan to hold investments for a long time

The idea of losing money in a volatile stock market can be scary. But if you pledge to hold onto your investments for decades, then frankly, the events of 2024 shouldn’t really concern you.

Let’s imagine you invest $1,000 this month in a certain company, and by June, that investment is only worth $600. That’s a hard thing to see. But if you remind yourself that you’re not cashing out that investment for another 30 years, it puts a temporary $400 drop in a whole different perspective.

In fact, a $1,000 initial investment that’s worth only $600 by June could very well be worth $1,200 by December. But if you know you’re not using that money for many more years, that alone should give you peace of mind.

3. Look at broad market ETFs

Some investors take comfort in the fact that the performance of their portfolio is in line with that of the broad market — even when things turn bumpy. If you feel similarly, you may want to add some broad market ETFs, or exchange-traded funds, to your portfolio.

Buying shares of an S&P 500 ETF, for example, means that if the market gains value, chances are, so will you. When the market falls, your portfolio value should follow suit — but you know you’ll be in good company.

There are a lot of factors that have the potential to influence the stock market’s performance this year — upcoming elections, lingering inflation, and potential interest rate cuts (or hikes, depending on what inflation has in store). But if you branch out in your portfolio and commit to a lengthy investment window, you may find that you’re able to stress less over stock market volatility. And the less stressed you are, the less likely you may be to make a rash decision in your portfolio that results in a financial loss.

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