Investing in the stock market is always going to bring a certain amount of risk; however, when markets turn volatile, that is when risk factors increase exponentially. As one would expect, the COVID-19 pandemic drastically impacted stock markets across the globe. Sudden downturns made investors feel nervous, leading many to make poor financial decisions. Thankfully, Daniel Orfin is here to provide his insight into volatile markets.

Investing in a volatile market

Orfin is the founder and president of Orfin & Associates, a financial planning firm based in Troy, Michigan. Orfin & Associates, along with Dan Orfin himself, are diligent in helping their customers achieve their long-term financial objectives and have aided numerous customers since the pandemic began.

Below, Daniel Orfin discusses how to react when the market turns volatile and explains that sometimes the best reaction is not to act at all. Check out his top four tips for navigating market volatility amidst the COVID-19 pandemic.

Remember the Big Picture

Daniel Orfin reminds investors that when markets turn volatile, it is critical to remember the bigger picture. Perspective is key in these early stages when many people start to panic and pull out their investments. Although it can be difficult, remaining calm and staying positive will serve you better in the long run. It will also allow you to think more rationally about the stock markets.

For example, Daniel Orfin asserts that economic downturns are far from rare events. In the last one hundred years, there have been roughly six major recessions, and in every instance, the stocks have eventually recovered. While the COVID-19 pandemic is unprecedented, the result is likely to be the same. According to Daniel Orfin it is vital to keep some perspective and avoid making uneducated irrational decisions.

Create a Balanced Financial Plan

Daniel Orfin’s second tip for navigating market volatility is to create a balanced financial plan. At Orfin & Associates, Daniel Orfin always recommends that his clients include a mix of investments in their portfolios.

Diversity is essential when it comes to financial planning. Having a mix of domestic and foreign stocks, bonds, and short-term investments in your portfolio will offer a certain degree of protection should markets turn volatile. Additionally, when updating your financial portfolio, you want to ensure you have a plan that you can live with through the ups and downs of the market.

While your goal and financial circumstances must also be considered, so too should your risk tolerance during economic uncertainty. Daniel Orfin advises many of his clients to plan for the future with an economic recession in mind just to be on the safe side.

Investment strategies

Continue to Invest

Volatile markets might seem intimidating, especially to amateur or passive investors. But Daniel Orfin asserts that often the best time to invest in stocks is when it feels like the market is at its lowest. This is because the potential to make more money in a quick period of time increases during an economic downturn. However, there are several rules you should follow when it comes to investing in a time of great market volatility.

According to Daniel Orfin, he always advises his clients to perform extensive research, be selective with stocks, keep a detailed log of all transactions, and above all, start small. Investing consistently is key, during any type of market, but when the markets are especially volatile, it is best to only invest a small amount to begin with and go from there.

Take a Hands-Off Approach

Market volatility can make some people extremely stressed and uncomfortable. If this sounds like you, then Daniel Orfin of Orfin & Associates recommends that you take a hands-off investment approach. Such an approach means turning your portfolio over to a professional financial planner to manage.

Orfin & Associates has received many new customers in the past six months, who simply did not have the time or risk tolerance to deal with their investments during the current economic recession. If you are extremely risk averse and are tempted to sell all of your investments during this time, he urges you to seek help from an expert before you do so.

A professional will be able to assess your portfolio through an objective lens, and guide you to making smart financial decisions that will not endanger the money you have worked hard to save.