Investments Keeping You Up at Night? Managing Stress During Market Volatility

The pandemic has been a source of financial stress and worry for many people. It has affected investors across the board, from beginner to expert. The source of all this stress is market volatility, which hasn’t been this high since the market crash of 1987 over 30 years ago. - not to mention the fact that this is the largest volatility spike linked to a disease outbreak in history.¹ 

Living through COVID-19 is stressful enough. Feeling hopeless about an unpredictable stock market certainly isn’t any help. If you’re one of many worrying about their investments, these are some dependable ways to reduce stress and make a plan moving forward. 

Mental Health Is Key 

Stress is known to have many negative effects which have been noted by Psychological professionals. It impacts sleep, cognition and overall physical health.² In times of financial as well as social uncertainty, it’s important to first regulate your mental wellbeing; high stress levels actually change human perception, increasing the likelihood of impulsive decision-making.³ This is why it is important to manage stress with your lifestyle first, before making any major investment changes. Financial advisors can play a major role by keeping you from making snap emotional decisions. 

Reducing Stress Without Changing Your Finances 

Stress makes us feel as if we’re losing control. This is why it’s vital to take control of your lifestyle, independent of finances, wherever you can. The following suggestions have been proven to have positive effects:⁴ 

• Focus on being healthy. Some tried and true suggestions: get up and move (exercise is always a good thing), go to bed (aim to get a good night’s sleep every night), be aware of your eating habits (what you eat matters). You should also allocate time to engage in recreational activities that make you happy, or even explore a new hobby. 
• Don’t use unhealthy coping mechanisms. These can be harder to recognize than one might expect. Don’t smoke or drink in excess to cope with stress, but also be wary of overworking yourself or unnecessary risk-taking.
• Don't isolate yourself. Staying connected socially can help reduce stress.⁵ Experiencing the combined effects of financial stress and social distancing measures due to COVID-19 makes people susceptible to feelings of isolation. Lean into your support system and connect with others to avoid feeling consumed by anxious thoughts.

Dealing With A Volatile Market 

While all of the previously mentioned actions can help you deal with stress, it’s impossible to do without addressing the elephant in the room: the stress from your investments. 

The first step is to accept the fact that the Market will always go up and down. The optimistic bull run of the past 11 years took a swift downturn, and we’re now in a period of  uncertainty.⁶ During periods like this, reducing anxiety can be difficult but if you keep the following guide lines in mind you may find your anxiety reduced. 

Give It A Rest 

Over-checking your portfolio is ill-advised in general and even more so during market downturns. Most investors are in it for the long run and downturns are part of that process. If you are constantly checking your investments, you may be causing undo stress. That stress may cause you to make a snap decision which may feel good in the moment, but cause greater discomfort over time. It may be in your best interest to pause and step away from your investments in order to gain perspective.

Think About Your Goals 

While you should avoid over-checking, downturns are a great time to assess your investments and see if they are line with your long term goals.  If you don’t invest, how do you expect to achieve your goals? 

Even though the stock market brings periods of uncertainty, if you are a long term investor, your goals likely haven’t changed. Remember that your investment plans will outlast a period of market volatility. 

Decision Making And Your Investments 

If you have an advisor, talk to them about your concerns. If you don’t have an advisor and think it’s time to work with one, now’s an opportune time. No matter your circumstances, the fundamental piece of advice is to avoid making an uninformed decision. Patiently observing your losses isn’t easy - but note that as bear markets average losses of 33 percent, bull markets are much longer in duration and come with average gains of 159 percent.⁷

Remember that the market goes up more often than it does down and bear markets are a normal part of investing. It difficult to remain positive in the face of gloomy news wherever you look. It’s difficult to watch the value of your investments decrease but remember, long-term returns will outweigh the short-term losses. Until then, focus on your mental wellbeing and solidify your financial plans.