What financial advisors are telling investors about market volatility

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As investors grapple with stock market volatility, it’s important to focus on financial plans and avoid emotional moves that could hurt future portfolio growth, experts say.

Stocks continued to fall early on Tuesday after President Donald Trump announced higher tariffs on Canadian steel and aluminum. At one point, the S&P 500 was down as much as 10% from an all-time high in February. The benchmark rebounded slightly by late afternoon.

The Nasdaq Composite on Monday dropped 4%, its worst day since September 2022, and the Dow Jones Industrial Average fell nearly 900 points.

Despite the recent market drops, however, long-term investors should know that “volatility is part of the game,” said certified financial planner Douglas Boneparth, president of Bone Fide Wealth in New York.

“You’re seeing the market more or less whiplash,” based on what Trump says day to day, said Boneparth, who is also a member of CNBC’s Financial Advisor Council.

Amid market uncertainty, investors should focus on what they can control, he said, including “their ability to stay the course, monitor their own feelings, revisit [portfolio] allocations and long-term investing strategies.”

Don’t let emotions ‘wreck your investments’

Panic selling during stock market dips often means missing the stock market recovery because there’s cash sitting on the sidelines, research shows. Many investors don’t realize that good market days happen close to bad ones.

For example, if you missed the 20 best days in the stock market from Jan. 1, 2003, to Dec. 30, 2022, that would have slashed total portfolio returns by more than half, according to J.P. Morgan Asset Management.

“Don’t let your emotions wreck your investments,” said CFP Ed Snyder, co-founder of Oaktree Financial Advisors in Carmel, Indiana.

Advisors build portfolios based on financial planning goals, risk-tolerance and timeline. If your goals haven’t changed, you shouldn’t react to stock market declines, he said.

Leverage your ‘margin of safety’ amid volatility

Your “cash reserves” may also quell financial anxiety amid stock market volatility, according to Boneparth.

“Nothing helps navigate rough markets like having a healthy margin of safety,” he said.

Boneparth recommends keeping six to nine months of living expenses in cash for emergencies and “opportunities,” which is higher than the three to six months rule of thumb that many other advisors recommend.

The “silver lining” to stock market dips is that you could find “quality companies or indices at discounted prices,” and use part of that cash to invest, Boneparth said.