7 tips for managing your investments in a volatile market

If you have investments in the stock market, the past several weeks have probably felt a little worrisome. (And by “a little worrisome” I mean “just barely keeping oneself from sobbing in the bathtub with a pint of Ben & Jerry’s.”)

U.S. and global markets have yo-yoed in reaction to the current administration’s inexplicable tariff wars. And since this market volatility is a direct result of America’s foreign economic policy rather than “normal” economic fluctuation, it’s difficult to know what to expect.

There’s no promise of fiscal unicorns and rainbows when we get to the other end of this trade war—but before you cash out your 401(k) and bury the money in your backyard, keep these important facts in mind.

Yes, this does feel different

If it feels like this market turbulence is different from others in recent memory, that’s because it is.

The current market instability stems from the president’s tariffs rather than a market crash (like the 2008 housing bubble collapse) or a disruptive global event (like the 2020 COVID-related market downturn).

That’s significant because economists and investors know what to expect from market crashes, which are relatively common and repeat on a somewhat predictable 7-to-10-year pattern, followed by an average recovery time of 1.4 years.

While the 2020 market shenanigans also felt unprecedented at the time—since none of us had ever lived through a global pandemic before—the recovery within four months of the market’s lowest point made it clear that everyone wanted to get back to business as soon as possible post-COVID. In both of those cases, it made sense to “HANK TOUGH!” and stay the course through the market downturns, since there was a long history of the market rebounding from similar situations.

But our current heartburn-inducing market ride stems from America’s global retaliatory trade war, and we can’t necessarily count on the “natural” rebound that has occurred after every other destabilizing market event in recent memory. Any countries angry about U.S.-imposed tariffs could make long-term financial or policy changes that will continue to affect our domestic market for years. There is simply no way of knowing what long-term effects there will be on our investments.

But there is a precedent

Just because we have never lived through a tariff-triggered market downturn doesn’t mean our current situation is unprecedented. Almost 100 years ago, isolationist tariffs introduced by Utah Senator Reed Smoot (yes, that was really his name) and Oregon Representative Willis Hawley exacerbated an existing financial crisis.

You may only remember the Smoot-Hawley tariffs of 1930 as part of the mind-numbing lecture Ferris Bueller missed on his day off, but this act raised import duties in an attempt to protect American farmers and businesses. Unfortunately, the Smoot-Hawley tariffs prompted retaliatory tariffs, and the American economy suffered for nearly a decade.

Thankfully, we are in a much better situation than our ancestors were. The Great Depression started with the 1929 stock market crash—before Smoot and Hawley teamed up, ammonia and bleach style, to impose tariffs. As of February 2025, the U.S. was enjoying a robust economy with a growing GDP, while the 1930 tariffs introduced by Smoot and Hawley kicked the wounded economy when it had already been sucker punched by the market crash.

The drop in your investment portfolio over the past couple of weeks was nausea-inducing in part because it was falling from a high point. But investors in the 1930s saw their money lose value in the crash and then lose more value from the tariff wars.

No one wants to hear a financial expert say, “It could be worse—and here are some examples of when it was!” However, recognizing that the recent turbulence is rocking an economy that had otherwise been stable can help fend off the worst of the panic.

Planning for the unexpected

Any financial adviser worth their salt will tell you that past performance is no guarantee of future returns, but understanding how markets have reacted in the past can offer some perspective on how markets may react in the future.

Since we can look back to the 1930s and see how other countries reacted to America’s isolationist financial and foreign policy—and how the market responded to tariffs being flung back and forth across borders like a game of hot potato—we can make plans and predictions based on the worst-case scenario.

We know from Smoot and Hawley that tariffs often lead to retaliatory tariffs, which can have a negative impact on the market. Even though there is no way of knowing what will happen, it’s probably a good idea for investors to buckle up for a bumpy ride. Here’s how:

Remember that the market will eventually recover

For anyone who is 10 or more years out from retirement, you can feel confident that things will improve. Unless we’re in a “dogs and cats living together—mass hysteria!” type of extinction-level event, consider ignoring your 401(k) balance for a little while.

Your investments will do better if you slowly back away from your portfolio and let the market recover.

Forewarned is forearmed

Just because the market will return to some semblance of normalcy without any effort on your part doesn’t mean you should do nothing.

Now is the time to shore up your finances by paying off high-interest debt, setting aside money in an emergency fund, finding ways to lower your expenses, and starting some secondary income streams in case of job loss or involuntary retirement.

All of these actions will help your finances whether we’re in for a long stretch of market nastiness or things are about to come up roses.

Invest conservatively as you get closer to retirement

Your asset allocation is supposed to get less risky as you approach retirement, since that will protect your principal in case of a market downturn at the wrong time. If you’re planning to retire in the next few years, you can make sure any new contributions you make to your retirement accounts are invested in low-risk-lower-return assets, like bonds, treasury funds, CDs, or other cash equivalents.

While these investments aren’t going to grow like the market normally would, the market also may not grow like it normally would. Stashing your contributions into these kinds of investments will offer you more peace of mind that the money will be waiting for your retirement.

You still have time for market recovery

Once you’re no longer in the flush of youth, you may assume you don’t have the luxury of investing for the long term. It’s not like a 60-year-old can afford to wait out the market like a 30-year-old can. But you can invest like you have decades ahead of you. Because you do!

As you approach retirement and even during your retirement, you will keep a portion of your portfolio invested for the long haul. When you retire, you don’t need all of your money right away. You’ll keep a significant chunk invested for a longer time horizon, which helps ensure that your money will last your entire life.

How to respond if you’re already retired

By far, retirees are the most vulnerable to a protracted market plunge. Going back to work and/or waiting out the market weirdness is generally off the table for retirees, so it can feel like there are no good choices.

But that doesn’t mean retirees are helpless in the face of larger economic forces. As with current workers and near-retirees, retirees can make plans now for the worst-case scenario. This might include:

• Reducing expenses: This is easier said than done, considering the price of eggs and everything else, but start thinking about ways to downsize your costs.
• Selling items: If you have a lifetime’s worth of home goods, collectibles, or Precious Moments figurines sitting around, you may want to start selling some off. This could be a good way to increase your retirement income without having to take money from your investments.
• Considering a reverse mortgage: Since your home is likely your most valuable asset, a reverse mortgage could be a decent way to access cash from something other than your investments.

Don’t panic—plan

Panic is the leading cause of selling at the market’s low point. Instead of selling off your investments to staunch the flow of tariff-induced anxiety, make a plan instead.

If you assume the market may be bumpy for the foreseeable future, how will that change your financial decisions?

Making investment choices based on that assumption will serve you well no matter what happens. In the best-case scenario, things will recover sooner than expected and this will be a footnote in your investing career. But even in the worst-case scenario, planning for volatility will help you make more rational decisions—and protect you from making your paper losses real by getting out of the market.

It may be a bit of a grim sounding win-win, but it’s a heck of a lot better than crying into a pint of Chunky Monkey in the bathtub.

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