Mind Over Market: Navigating Market Volatility with Confidence

Market volatility is something all investors face, likely more than once in their lifetime. Yet each time the market has a downturn, panic sets in and causes even the most rational investors to make costly mistakes. Watching your balance decrease can be scary, but it's what you do during the dip that defines your outcome. In market fluctuation, your ability to stay calm and committed to your long-term strategy is what will help you pull through and come out successful.

In market fluctuation, your ability to stay calm and committed to your long-term strategy is what will help you pull through and come out successful.

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The biggest risk in a volatile market isn't losing money - it's letting fear make decisions for you.

At the beginning of 2020, COVID-19 spread across the world causing global panic. As a consequence, investors feared the uncertainty of the economy leading to the largest point drop (2,997 points - 12.9%) in US market history*. While many investors rushed to sell, I saw an opportunity to begin my investing journey. I invested $3,000 in travel companies that were hit hard by the global pandemic. In less than a month, I watched my investments drop more than 16%. I could have sold - taken my loss as a lesson in investing - but that wasn't what I had set out to do. I was investing for the long-term and knew if I held my investments long enough I'd eventually see the return. By the end of 2020, the market bounced back and ended the year with a 7.25% gain. The $3,000 I had initially invested grew to over $5,000, showing me that patience and dedication towards my investing goals pays off. 

Since 2020, the market dropped significantly twice - once in 2022 due to the effects of COVID, and another in 2025 due to imposed tariffs. The market will continue to fluctuate throughout our lifetime, so it's important to have a strategy in place if you're someone who struggles during market volatility. Below are a couple steps I recommend to help you navigate market volatility with confidence.

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1. Don't Try to Time the Market

In my experience, waiting for the dip rarely works. You end up buying too soon, waiting too long, or never investing at all.

The best investing strategy I recommend to any investor is Dollar Cost Averaging. You invest a fixed dollar amount each month regardless of market performance. If you invest the same amount consistently, short term downturns will be offset.

2. Understand Your Risk Tolerance

I have a friend who thought they could deal with market volatility- that is, until a dip actually happened. It's easy to tell yourself you'll hold your investments when the market takes a turn, but it's another thing to follow through when you see your investments decrease.

Understanding your risk tolerance will help you select a mix of stocks, bonds, and other investments that will make you feel more comfortable with your investments.

3. Create Investing Goals

Creating investing goals and understanding the time horizon will help you stay on track. If you have a goal to save for retirement in 30 years, a market decline today should not affect your investing strategy.

4. Brush Up on Your Investing Knowledge

There's a lot to learn about investing, but taking the time to really understand the fundamentals of investing can help you make smarter investment decisions.

I recommend the following books for beginners:

• I Will Teach You to Be Rich by Ramit Sethi

• Rich Dad Poor Dad by Robert Kiyosaki and Sharon Lechter

• The Psychology of Money: Timeless Lessons on Wealth, Greed, and Happiness by Morgan Housel

• Investing for Dummies by Eric Tyson and Tony Levene

5. Find an Financial Accountability Partner

If you are struggling with keeping your investing strategy on track, find someone you can talk to who will remind you of your goals when you're feeling pressure to sell.

I recommend talking to a financial professional who will be able to remind you of your goals and discuss the impact of any changes to your strategy.

6. Use a Market Decline to Your Advantage

A market decline isn't always a bad thing! If you have sold or plan on selling investments within the year you can use a market decline to offset capital gains.

Tax loss harvesting rules can be somewhat complex based on your investing knowledge so be sure to talk to a financial professional before attempting this.

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*This information is represented from the Dow Jones Industrial Average which dropped 2,997 points (12.9%) on March 16, 2020.

Important Disclosures: Infinity Financial Services is a registered investment advisor offering investment advisory services through Core Planning, LLC. Registration does not imply a certain level of skill or training. This blog is for personal finance education, not advice, and you should consult with your own adviser before taking action. Please click here to read the full disclosures.