“Financial Fitness” with Ashlea (Kleitsch) Jones – Volatility

As I write this on Thursday April 3rd, 2025: Trump Tariffs have taken effect, the S&P 500 is down over 4%, and the Nasdaq is down over 5%. I am listening to CNBC where all of their guests are giving different projections on chances of a recession and trying to predict which companies will be the winners or the losers of the international effects of trade tariffs. It would be very easy to log in to your 401k or IRA account and turn to panic or have an emotional response.

Anytime there is volatility in the market, it is important to remember that emotional decisions are rarely positive ones and as long as you don’t need all of the cash today, there is still time for the market to work in your favor. It’s time, not timing, that matters.

1. Review your cash reserves. It never hurts to have some cash on the sidelines. Anything from 3 to 12 months of expenses in cash makes you less likely to respond emotionally to the portion of market exposed assets.
2. Review your timelines. Your investment allocations should match the timeline of liquidity needs for that money. If you are investing for the long term – leave it alone and let it work long term. Even if you are retiring soon or already retired, it is not uncommon to have a “bucket” of less volatile short‐term assets for the next few years of income – then a long‐term chunk of assets that are more apt to recover from short-term volatility. As life changes, your advisor will help you allocate and recalibrate accordingly.
3. Don’t overcomplicate your portfolio. The more levers available to pull, the higher the chance of an emotional reaction to pulling one. If you or your advisor can’t explain your investment goals in 1 or 2 sentences, it is likely more complex than it needs to be. Your portfolio should be built to absorb volatility. It should not need to be fine‐tuned every time there is a market reaction.
4. Remember why you wanted to invest in the first place. Volatility is the price you pay to have long-term returns that historically have outpaced any other long-term growth vehicle available to the market. If you truly can’t stand the volatility, you need to be in an annuity product, the money market, or simply cash – but then you can’t complain when your returns lag; especially at the risk of inflation outpacing your returns over time.
5. Focus on what has worked in the past. Owning a basket of successful businesses has historically rewarded long‐term investors and carried them through every challenge or bear market up to this point. Things like timing the market or moving to cash has historically been the worst thing an investor can do.
6. Focus on the things you can control. Your savings rate, cash flow, tax planning, asset allocation, and above all: your EMOTIONS. If you can not get control of these things, you are settng your long‐term goals up for failure.

As an advisor, helping my clients manage their emotions is sometimes the majority of my day. Paying a fee to an advisor isn’t just tied to returns. For some, the value in the fee is to be able to call me and have a sounding board. It has literally saved some of my clients thousands by not responding to emotional triggers. We are all human and hate to see our hard‐earned monies go backwards, but remember to keep the long‐term, long‐term and keep the cash, cash. Nobody can have the best of both worlds and those who try end up missing some of the best days in the market.

Anyone is free to call us to talk through fears anytime, but know the answer is likely going to be: stick to the plan. Keep saving, stay focused, and turn off the news if you need to.

“Somewhere out there, there is some poor soul in the wilderness who doesn’t have a phone or TV so he doesn’t know what he is supposed to be anxious about.”

Financial Advisor
Prime Capital Financial
Cedar Rapids, Iowa
primefinancialcedarrapids.com
(319) 269-7143