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Investing Basics

Resources: Investing Basics: Volatility

Every investor knows that financial markets experience highs and lows. When these fluctuations occur it’s termed “market volatility.”

Stock market history is full of sharp declines that create anxiety among investors. These feelings can intensify with negative reports from the popular media, or even from the concerns of friends and neighbors.

Some of these news reports may be accurate, while some are clearly sensationalized. However, in a time of market volatility it’s important to follow these three guidelines:

  1. Understand the history of volatile markets  
  2. Maintain your long-term investment goals
  3. Don’t succumb to panic and fear

History is a great teacher, and the most important lesson is this: markets have typically rebounded after a fall.  

Here are a few lessons for investing during a volatile market.

Some investors invest emotionally instead of maintaining their long-term goals. Your financial professional is a helpful resource at these times.

To assist you in handling periods of market volatility, we offer the following helpful resources:

The History of Volatile Markets details past events, their influences on the stock market, and how markets have recovered.

Emotional Investing explores the behavior of many people during periods of market fluctuation.

Assess Your Risk Tolerance explores investment risks versus rewards, and links to a questionnaire to help identify your risk tolerance.

A mutual fund's share price and investment return will vary with market conditions, and the principal value of an investment when you sell your shares may be more or less than the original cost.

Asset allocation/diversification does not guarantee a profit or protect against a loss.

 

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While this communication may be used to promote or market a transaction or an idea that is discussed in the publication, it is intended to provide general information about the subject matter covered and is provided with the understanding that The Principal® is not rendering legal, accounting, or tax advice. It is not a marketed opinion and may not be used to avoid penalties under the Internal Revenue Code. You should consult with appropriate counsel or other advisors on all matters pertaining to legal, tax, or accounting obligations and requirements. For more information about our funds, including their full names, please see the Principal Funds, Inc. prospectus or call Sales Support at 1.800.787.1621.

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