The stock market can feel like a roller coaster — thrilling on the way up and terrifying on the way down. If you’re staring at headlines predicting a crash, it’s natural to worry about your portfolio. After all, no one wants to see their hard-earned retirement savings evaporate overnight.
You might be asking yourself if you should cut your losses or stick it out. Or should you bring in a financial advisor to help navigate the storm?
Enduring a market downturn is never easy, whether you’re a novice investor or a pro with years of experience. To help you navigate the journey, here are some tried-and-true rules to stick to during a market downturn, according to financial advisors.
The first rule of a market crash: Keep your cool. Financial experts stress that panic-selling when stocks are down is one of the biggest mistakes investors make.
“The No. 1 thing I try to convey to clients is that while it doesn’t feel good, they should try to focus on the long term,” says Mike Hunsberger, a certified financial planner (CFP) and owner of Next Mission Financial Planning.
Market volatility is normal, but selling low locks in your losses. Historically, the stock market has always recovered from corrections, bear markets and crashes. If you panic and sell, you miss out on the potential rebound.
“The reality is, no one knows if tomorrow will be the day the market turns around, and history shows that some of the best days happen right after the worst,” says Daniel Goodman, CFP and founder of Good Better Best Financial Planning.
The lesson here? Stay invested. The bounce-back might be closer than you think.
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Bear markets and market crashes happen more often than you might realize. They’re not the exception — they’re a part of the natural market lifecycle.
“I try to remind clients of the market volatility of 2018,” says Joe Conroy, a certified financial planner and owner of Harford Retirement Planners. “I have to remind them because no one remembers the volatility of 2018.”
As Conroy points out, history doesn’t repeat itself, but it often rhymes. To demonstrate this to clients, he points out similarities between current market turbulence and 2018.
“We were facing concerns about interest rates and trade wars with China,” says Conroy. “If you don’t remember the volatility of 2018, you probably won’t remember this downturn of 2025 in a few years either.”
A well-structured retirement portfolio, whether in a 401(k) or IRA, is designed to weather almost any storm. If your investment strategy was built for long-term growth, a temporary downturn shouldn’t derail it.
“When the market takes a hit, the first thing you should do is go back to your plan,” says Goodman. “Your portfolio was set up for times like this.”
If your current anxiety is leading you to question everything, Goodman points out, “that’s not a market problem, that’s a planning problem.” A solid financial plan already accounts for these moments.
And if it doesn’t? Then it might be a good time to speak with a financial advisor who can help you put a solid financial plan in place. More on that later.
A diversified portfolio spreads your investments across different asset classes and sectors. This helps reduce the overall risk of “putting all your eggs in one basket,” so to speak.
When you’re diversified, you lower the risk of one particular company or asset class dragging down your returns to gut-wrenching levels.
“I reinforce that we’re diversified across U.S. and international, large and small companies, and value and growth positions,” says Hunsberger. “Many international stocks have been doing well recently, too.”
Diversification means that while some parts of your portfolio may decline, such as stocks, others might hold steady or even grow, such as bonds. This balance is key to staying resilient during downturns.
If diversifying by yourself sounds intimidating, you can always explore robo-advisors, like Betterment or Wealthfront, which help create a customized portfolio across stocks, bonds and cash to help moderate overall portfolio volatility when the stock market takes a nosedive.
While it may feel counterintuitive, a market crash can often be a unique buying opportunity since stocks are essentially on sale.
“If they’re still contributing to their investments, I tell them these pullbacks can be a great time to buy more,” says Hunsberger.
Think of it like buying a new tech gadget or handbag at a discount on Black Friday. As long as your long-term goals haven’t changed, continuing to invest during downturns can position you for future growth — boosting your returns significantly once the market rallies again.
If the thought of managing your portfolio during a downturn is keeping you up at night, or if you’re having second thoughts about your portfolio strategy, it might be time to consider working with a financial advisor.
A financial advisor can offer perspective and keep you from making emotionally charged decisions. Their role is to help you stay focused, even when the market is volatile and nearly impossible to predict.
“When I talk to clients about volatility, they might listen to what I’m saying about the market and their investments, but what they really hear is that I’m calm, not freaking out — and they draft in that confidence,” says Conroy. “Especially after getting them through so many market drops in the past.”
An advisor will review your portfolio to ensure it’s aligned with your goals and risk tolerance. They’ll also check if your emergency fund and short-term cash reserves are healthy and sufficient.
“I help them understand we’ve got enough money outside the stock market to cover planned expenses in the near-term, over the next three to five years,” says Hunsberger.
Advisors can also evaluate strategic opportunities you might not even consider or be aware of. For example, they might suggest:
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Rebalancing your portfolio: Buying low and selling high by adjusting your asset allocation.
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Tax-loss harvesting: Selling investments at a loss to offset capital gains and reduce your tax bill.
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Roth conversions: Moving assets from a traditional IRA to a Roth IRA when stock values are lower can help lower your tax liability. “You can convert the same number of shares but with a 10 percent lower tax bill, roughly speaking,” says Conroy.
Perhaps most importantly, financial advisors offer peace of mind, which can be invaluable when emotions are running high.
Market crashes are unsettling, but they don’t have to derail your entire financial plan. Don’t panic, stay diversified, think long-term and consider continuing to invest even when stocks are down.
“If you’re freaking out about the market, take a step back and remember: We built your portfolio knowing this could happen,” says Goodman. “If your plan was designed right, you don’t need to change course — you need to trust you set your plan up right in the first place.”
