When the market takes a turn, even the most disciplined investors can feel that familiar knot in their stomach. Maybe it starts with a headline, or a quick glance at your portfolio, then suddenly, your heart rate picks up and your confidence wavers. What if this time really is different?
That reaction is normal. In fact, it’s hardwired. Our brains don’t distinguish between a bear market and a bear in the woods. Uncertainty triggers the same fight-or-flight response. That’s why times of market disruption, especially when they’re accompanied by 24/7 media coverage, can feel so destabilizing. While the instinct to do something might feel right in the moment, it often leads to decisions that hurt more than they help. By understanding the psychological forces at play, you can learn to manage your reactions, make better investment decisions, and find calm amid the fluctuations.
Financial Media: Information or Instigator?
One of the most important ways to stay grounded is to reduce exposure to emotional messaging. Financial media is designed to capture attention, and the easiest way to do that is by dialing up the fear. The more you engage with this kind of content, especially when it’s speculative or sensational, the more likely you are to act impulsively. That’s not a reflection of your financial literacy; it’s simply how we’re built.
Keep in mind that more information doesn’t always lead to better decisions. Studies have shown that consuming excessive financial news and checking your portfolio too often are linked to lower investment performance. When you engage in this behavior, it becomes harder to separate signal from noise, and the pressure to “do something” increases. Ironically, one of the best things you can do when the market gets noisy is to step back and do less.
The Best Advice May Be to Do Nothing (At First)
Sometimes the hardest action is no action at all. But often, waiting is the best way to maintain discipline and avoid regret later. Taking a pause before reacting can dramatically improve your decision-making. Something as simple as waiting 48 hours before acting on a strong financial impulse, like selling after a market dip, can lead to better outcomes. Time gives your emotional response a chance to settle, so your logical reasoning can catch up.
Another effective technique is to step outside of yourself for perspective. Ask what advice you’d give to a friend or loved one in the same situation. Most of us are much more level-headed when we’re not emotionally attached to the outcome. Externalizing the decision like this can help you reconnect with your long-term plan and reduce anxiety in the moment.
Use Your Financial Plan as a Compass
When emotions run high, it’s easy to lose sight of your long-term goals. Having a clear framework to follow during uncertain times is also key. A thoughtful financial plan provides more than just projections; it gives you a structure for decision-making when emotions run high. In addition, using automated systems like recurring investments and rebalancing can also reduce the temptation to react emotionally. These tools work quietly in the background to keep your portfolio aligned with your original plan, no matter what the market is doing. Finally, working with a financial advisor adds another layer of stability. Advisors provide perspective, guide you in times of doubt, and ensure your decisions align with your greater goals.
Make Sure Your Plan Reflects How You Naturally Think
Tools like the Retirement Income Style Awareness (RISA®) Profile can help you align your financial plan with your personality traits and feelings. It’s designed to help you identify the strategies that best align with your preferences. For example, someone who values stability may find more comfort in protected income sources, while someone more comfortable with flexibility might prefer a market-based approach. When your plan fits your style, it becomes easier to stay disciplined, especially when things feel uncertain.
Market volatility may always be part of the investing experience, but panic doesn’t have to be. With the right mindset, a personalized plan, and a few well-timed pauses, you can move through uncertainty with clarity and confidence.
Want to learn more? Listen to Ep. 174 of the Retire With Style Podcast.
