77% of Investors Think the Market Will Be Volatile in 2023. Here’s What to Do in Light of That

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Market conditions could remain tricky, but don’t panic. 

It’s more than fair to say that 2022 was a tough year for stock investors. And now, a lot of people are seeing lower balances in their brokerage accounts and IRAs than they enjoyed a year ago.

Unfortunately, there’s no guarantee that the stock market will recover in 2023. And we could be in for another volatile period, especially given that we’re still grappling with factors like inflation and uncertainty surrounding a potential recession.

In a recent survey by Allianz Life, 77% of respondents said they think the stock market will continue to be very volatile in 2023. And you may be wondering what to do in light of that. But the best solution may be to do nothing at all.

Stay the course

Maybe you had $28,000 in your IRA account a year ago, and now your balance has been whittled down to $22,000. That’s a really frustrating thing to see.

But remember this. If you’re investing for a far-off goal, like retirement, there’s no reason to sell off investments anytime soon. And if you don’t sell your investments while they’re down, then you won’t lose money.

So, going back to our example. Your IRA is now only worth $22,000 based on the value of your portfolio. That’s a bummer. But if you do nothing — meaning, you don’t sell anything and also don’t contribute another dime — you may find that in a year from now, your account balance is back up to $28,000. And if the market does well, you might have a balance of $35,000 a year later — even if you don’t end up contributing any more money.

So all told, doing nothing is a really solid bet during a volatile stock market. Unless you have a specific reason to liquidate a given investment, there’s really no sense in going that route, because all you’ll be doing is locking in a loss

Keep investing

Leaving your existing investments alone and not selling them is a good way to ride out a period of stock market volatility. But at the same time, it pays to keep investing over the next 12 months, even if the market is far from stable.

First of all, the more money you put into a traditional IRA, the more tax savings you’ll get to enjoy. Also, right now, stock values are down across the board — which makes it a good time to buy. If a company you think has solid potential was trading for $80 a share a year ago, and you can now scoop up shares for $70 apiece, why wouldn’t you want to do that?

Just as it pays to buy goods on sale, so too does it pay to buy stocks when they’re on sale. Only the value of your goods from a store may not increase, whereas the value of your stocks might.

A turbulent stock market can be tough to handle. And the thought of continued volatility might seem draining. But if you pledge not to sell off investments at a loss, you won’t actually lose any money. And if you keep investing as the opportunity presents itself, you might set yourself up to grow a lot of wealth over time.

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