Investing Through Market Volatility: Staying Grounded When Headlines Get Loud

If you’ve been watching the markets lately—or just the headlines—you’ve probably seen a lot of noise. Phrases like “market crash,” “economic uncertainty,” and “recession fears” are everywhere. And understandably, that can spark worry.

But let’s take a breath and unpack what’s really happening. Because despite all the scary headlines, a well-diversified portfolio isn’t in freefall—and in many cases, it’s holding steady or even slightly positive this year. That’s right: flat to slightly up, not crashing.

Periods of market volatility often prompt a wave of uncertainty, and with that uncertainty comes an increase in investor questions. Clients want to know: “What’s safe?” “Is now the time to move to cash?” “What happens if things get worse?”

While the emotional response to market headlines is valid, making investment decisions based on short-term movements is rarely the best course of action. In fact, navigating volatility successfully often comes down to applying fundamental investing principles consistently—even when it feels uncomfortable.

Let’s explore some of the most common questions we’re hearing and how we address them with disciplined, evidence-based strategies.

Redefining “Safe”: What Does Safe Actually Mean?

When clients ask about the “safest” investments, it’s important to clarify what they mean by “safe.” Does safety mean an asset doesn’t decline in value? Or does it mean you can access it anytime without penalty? Or that it will outpace inflation over the long term?

The truth is, all investing involves trade-offs between risk, return, liquidity, and time horizon. For example:

• Cash and short-term Treasuries offer stability, but likely won’t keep pace with inflation.

• Stocks are more volatile in the short run, but offer a risk premium—a higher expected return over time, precisely because of that short-term risk.

The concept of a "risk premium" is one of the most important concepts in investing.

As Investopedia defines it:

“The risk premium is the return in excess of the risk-free rate of return (treasury bills) that an investment is expected to yield.”

In other words, the very reason we earn more over time in equities is because they aren’t “safe” in the traditional sense. But when placed in the right portion of your portfolio—ideally aligned with dollars you won’t need for 7-10+ years—that risk becomes manageable.

So, What Should Investors Do During Times of Volatility?

Rather than attempting to avoid volatility altogether (which typically results in chasing headlines and missing opportunities), investors should focus on managing volatility within their plan. At LifePoint Planning, here’s how we do that:

1. Maintain Diversification

A properly diversified portfolio—typically including U.S. stocks, international equities, and fixed income—can help reduce overall portfolio volatility. While the S&P 500 is currently down ~8% from its recent high (at the time of this writing), many diversified portfolios are flat or slightly positive year-to-date!

Green line: A balanced portfolio of 60% Vanguard Total World Market Index and 40% Intermediate Term Treasuries

Blue line: 100% invested in Vanguard's S&P 500 ETF (VOO)

2. Rebalance Strategically

Rebalancing is the process of selling assets that have outperformed and buying assets that have underperformed, to maintain your target allocation. This naturally encourages buying low and selling high—an inherently counter-cyclical strategy that aligns well with disciplined investing.

3. Reassess Goals Before Reacting

One of the most important roles of an advisor during volatile times is to revisit the client’s long-term goals. If those goals haven’t changed, then short-term market noise shouldn’t dictate portfolio strategy. The plan—not emotions—should guide action.

4. Use Timeline-Based Planning

We segment portfolios into different “buckets” based on time horizon:

• 0–2 years: Cash and short-term bonds for liquidity and stability.

• 3–6 years: Balanced investments with moderate volatility.

• 7+ years: Equities for long-term growth potential.

This helps provide peace of mind. If you don’t need to touch your long-term equity dollars for several years, it becomes easier to tolerate short-term fluctuations.

Additional Ways to Mitigate Volatility

Clients who remain uneasy may benefit from integrating additional tools or techniques:

• Dollar-Cost Averaging (DCA): Investing cash gradually over time helps reduce timing risk and encourages consistency during volatile periods.

• Buffered ETFs: These investments offer a built-in level of downside protection, making it easier for some investors to stay invested during periods of uncertainty.

• Bond Allocation as a Volatility Dampener: Bonds don’t exist to generate high returns—they’re in the portfolio to reduce overall risk and provide stability during drawdowns.

Are There Viable Alternatives to the Stock Market?

Alternatives like real estate, annuities, private credit, or structured notes are sometimes positioned as lower-risk or “non-market” solutions. However, each of these comes with its own unique set of risks: illiquidity, credit risk, lack of transparency, or limited upside potential.

Instead of replacing equities entirely, the better approach is usually complementing them with non-correlated assets in a diversified framework. The goal isn’t to eliminate volatility, but to manage it in a way that aligns with the investor’s timeline and objectives.

Not everything outside the market is a “safe haven,” and some alternatives come with their own volatility.

Summary: A Framework for Investing During Volatility

When fear rises, focus on the fundamentals:

• Volatility is normal. It’s a feature of markets, not a flaw.

• Diversification works. A mix of assets helps smooth the ride.

• Rebalancing creates opportunity. Buy low, sell high—systematically.

• Planning reduces panic. Know which dollars are for today, and which are for 10 years from now.

• Stay invested to earn the risk premium. Avoiding downturns often means missing the recovery.

The Bottom Line

Here’s the good news: You don’t have to react to every headline. Your portfolio isn’t the S&P 500. It’s a mix of different investments that are designed to weather times like these.

Market volatility can feel uncomfortable, but it doesn’t have to derail your plan. We’ve built your portfolio with times like this in mind.