How to Stay Calm When Markets Make You Uneasy

Fluctuations in the market are common. While past performance is not an indication of future results, historically, every market downturn in U.S. history has ended in an upturn. How do you stay calm when you're feeling those bumps? Jacquette M. Timmons is a financial behaviorist with an MBA who helps clients work through money challenges such as these. Here's what she suggests.

1. Understand the source of your uneasiness

The first step to ease those nerves, Timmons says, is to ask yourself a few questions. 

"When you start investing in the market, it's generally to build wealth in service of a goal over the long-term. What is that goal? Are you afraid that you won't have the money to meet a particular need? What is that particular need?"

If your goal is not to grow your money over the course of years or decades but rather to save in the short term, this could be a good reminder to diversify and keep some money accessible in a savings account and in an emergency fund. That way, you should have enough on hand to cover your current expenses, Timmons says.

Recognizing that your goal is to invest for the long haul, by contrast, can help you remember that a few days' worth of unsteadiness shouldn't be cause for alarm and disrupt your financial plan and diversified portfolio. In the past, the market has always recovered and then continued to rise.

"You have to keep in mind, 'What's your goal?' and 'What's the timing of that goal and when are you going to need the liquidity for that goal?' says Timmons. If you have a long-term time horizon, this may be a time to buy.

Another question you could ask yourself is, "Are you worried in response to the fact that other people seem worried? If not, what are you responding to?" It could be that constant updates about the news cycle are feeding your fears in an unhelpful way. Timmons says that the solution could be as simple as turning off your TV for a bit.

2. Stay informed, but don't read every headline

For a lot of people, having the right information can bring on a sense of comfort. Better understanding what the market is doing and why might affect your feelings about any sudden highs or lows.

Still, Timmons says, there's a difference between staying informed and following every breaking news alert. "As the person consuming the news, you should be able to look at it with a little bit of a passing glance," she says.

You may actually benefit from waiting for the market to stabilize and not letting your news feed dictate your emotional experience or your actions. Same goes for your portfolio. Though it's smart to monitor it, you don't want to check it too often. Many experts suggest once per quarter.

3. Pause for 24 hours before making any big decisions

If the market's moves have made you consider pulling out of the market altogether, you're not alone. People who withdraw funds out of panic can miss out if the market rebounds, though. For that reason, Timmons urges investors, especially long-term investors, not to make any rash decisions.

One way to keep from acting impulsively is to institute a waiting period for yourself when you want to make these kinds of choices.

"Take a pause and see if you can wait 24 hours before making any kind of long-term decision and see if you still feel that same intensity to take action 24 hours later," says Timmons. "And then if you do, by all means, start the process. If you don't, give yourself another 24 hours."

Take some time to reflect on what is making you feel uneasy, she suggests. You don't want to create a cause and effect relationship between your emotion and the market's volatility. Emotions are valid, but you can recognize them without putting them in control.

A waiting period becomes "a way of creating a boundary," she says, "so that you're acknowledging your emotions, but you're being systematic about the actions that you're taking."