3 tips for navigating market uncertainty

We’re not quite halfway through the year, and we’ve already seen plenty of headlines — whether about tariffs, layoffs or the future of AI — that are leading to a sense of uncertainty for many. While the cause of uncertainty can change, certain strategies remain useful for those trying to navigate through it and stay on track financially.

Do: Avoid bears

Don’t: Avoid bear markets

The way our brains process risk serves us well in many areas of life. Being sensitive to risk is good for survival when you’re living among real bears. But that wiring doesn’t work as well when it comes to investing. Financial markets are inherently risky, and stomaching downturns is the price of admission.

“No risk, no reward” means that downturns are a normal part of how financial markets work.

A correction in the U.S. stock market, which means being down 10% from a recent high, happens about once a year on average. A bear market, or being down 20%, happens about every one to three years.¹ While these downturns can feel uncomfortable, especially if they follow periods of calm or consistently upward markets, they’re normal.

Understanding your ability to tolerate losses is one way your financial advisor tailors your portfolio.

Risk is a part of financial markets, but your portfolio can be designed to take more or less of it, which will hopefully allow you to stay invested even during downturns. Your financial advisor helps you balance different dimensions of risk:

• Your risk tolerance — the amount of risk you’re comfortable taking
• Your risk capacity — how much risk you can afford to take
• Your required risk — the amount of risk you need to take to achieve your goals

You may have to make compromises if there are mismatches. For example, if even small losses make you anxious, you might want to stay out of the market. But that could mean you’re likely to run out of money in retirement, as you may need the potential growth of investments to outpace inflation. In this case, your risk tolerance is lower than your required risk. Your compromises could be accepting some discomfort in investing, finding ways to increase your savings or adjusting your lifestyle. The key is finding the right balance of risk to make the journey as comfortable as possible while also increasing the likelihood you can achieve your financial goals.

Not being invested comes with its own risks.

While bear markets are normal, they’re notoriously hard to time with precision. In an effort to avoid a loss, you may also accidentally avoid the best performing days. Missing even a few of these can have a major negative effect on long-term performance. That’s why we generally advise to focus on “time in the market, not timing the market.” Or said another way, don’t run from bear markets.

Don’t: Check your account daily (or hourly)

Do: Check your emergency fund

When headlines become alarming, it’s tempting to fear the worst as you wonder, “What does this mean for me?” You may worry about declines in your portfolio that push your goals out of reach or perhaps an unstable economy that puts your job at risk. But becoming overly vigilant about checking investments — assuming they’ve been allocated appropriately — can do more harm than focusing on something you can control to better position yourself for the unexpected in life.

Take a lesson from the ostrich.

If you aren’t needing your investments anytime soon, checking them often can cause unnecessary stress and make it more likely you’ll want to buy or sell something at an inopportune time. While burying your head in the sand (like an ostrich) may not be good advice for most situations, this is one where it may benefit you. You may even want to turn off the news for a bit. Headlines are often meant to elicit strong emotions, not to help you stay disciplined about your investments.

Improve your resilience by fully funding an emergency fund.

Instead of focusing on a market you can’t control, look for strategies that can help put you in the driver’s seat. A key part of preparing for hard times is having an adequate amount of cash in an emergency fund for dips in income or unexpected expenses. We generally recommend three to six months of total expenses. You can take comfort knowing that invested assets have time to recover when you’re confident your near-term needs can be met. If you’ve got enough cash on hand, you can explore increasing your savings rate (market downturns are usually good times to buy).

Don’t: Rush into big financial decisions

Do: Get a gut check from a professional on big financial decisions

Time can be your friend in making decisions.

If you’ve ever done or said something out of fear or anger only to regret it later, you know strong emotions don’t always lead to the best decisions. Set up rules ahead of time that create friction between a strong emotion and a financial decision. For example, promise yourself you won’t execute on a large financial decision unless you’ve had some time to properly consider (and reconsider) it. For instance, you could choose at least a night to sleep on it or three days or a weekend.

Use a professional to help make better decisions.

Having someone who is objective, knowledgeable about finances and knows you and what you’re trying to accomplish can be incredibly valuable. Your financial advisor can be a great accountability partner to help you stay on track. They can revisit why you’re invested in the first place and determine if anything has changed that may warrant an adjustment in your portfolio. They can also help you work through any underlying concerns and what (if anything) to do about them.

Uncertainty can be tough to tolerate. Having reasonable expectations about the market, focusing on what you can control and relying on your financial advisor as a guide can help you travel the unknown more confidently and securely.