Taking Advantage of Market Volatility

Investment Management

Apr 27, 2022

April is usually a good month in the markets. It is also a nice month in general as winter begins to fade and spring begins to take stage. This April has not been your average April. Some parts of the country experienced record snowfall and the markets are performing as erratically as the weather. This is yet another reminder that investing is not easy. Markets are as unpredictable as they have ever been. Furthermore, there are a lot of Wall Street legends downright admitting that they are confused.

With all this volatility, what is an average investor supposed to do? Sometimes no action is the best action. Regardless of that, there are some things unrelated to the market that you can control. The first thing to try to control is your mindset. Do you have sufficient cash to cover your short-term needs? If the answer to that question is yes, then you should be able to ride it out. Don’t panic. If you are worried, try to think about why you invested and when you plan on accessing your invested funds. Most importantly, you should consult with a professional before making any major changes to your portfolio.

Here are some other prudent moves to consider:

  • Can you increase your 401k contribution? If your cash flow permits, this is a great time to be buying more shares at discounted rates. Your 401k should be a long-term asset. Depending on your age, this will likely not be the last volatile market cycle you live through.
  • Have you made an IRA contribution for 2022 or do you plan on making one? If you are under 50, you can add up to $6K to an IRA.  If you are over 50 and working, you can add up to $7k. If you have the cash, do your contribution now while market levels are lower.
  • Were you thinking about adding some cash to your investment account? You will never perfectly time the bottom, but if you have some extra cash and you have time on your side, you are getting in at lower levels than you were at the beginning of the year.  
  • Have you been thinking about converting your IRA to a Roth?  If your IRA has taken a hit from this volatility, your tax liability for converting to a Roth has just decreased.  It is worth considering while the value is lower. We strongly encourage you to consult a professional so you fully understand the taxes before you take any action.

You cannot control the news or the market.  This situation is going to take some time to play out and it appears as though market volatility is going to stick around for a while.  Stay focused on the long term and look to take advantage of opportunities if you can. Most importantly, sticking to your plan and maintaining your discipline will win over time.


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