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How to Preserve Your Wealth in a Volatile Market

David J. Blount, CFP®

LPL Financial Advisor

Investing in the stock market can be a great way to grow your wealth over time. But one reality that holds true is that market volatility can spark overwhelm and uncertainty, which can be unnerving for investors. When the stock market experiences sharp fluctuations, it can be challenging to make sound investment decisions, leading to potentially costly mistakes.

To safeguard your wealth in a volatile market, it’s important to take a thoughtful and strategic approach. This may involve making some changes to your investment strategy, being disciplined about your investment decisions, and keeping your emotions in check. Let’s explore some strategies to help safeguard your wealth in a volatile market and pursue long-term financial success.

1. Maintain Your Income and Control Your Expenses

This may seem overly obvious, but it can’t be overstated: your income is one of your greatest wealth-building and preservation tools. A consistent income stream will allow you to build an emergency fund and prevent the need to sell assets or take on debt to meet your basic expenses.

Another way to safeguard your wealth is to control your expenses. Budgeting and tracking spending habits are common ways to do this, but you can also consider consolidating or refinancing debt.

For those who are no longer dependent upon earned income and are taking distributions from an investment portfolio instead, consider reducing your expenses and your withdrawals during market downturns. This will help maintain your income without selling any of your portfolio assets.

If you are still in the accumulation phase and dependent on earned income, focus on building an emergency fund to cover 3-6 months of basic living expenses. Some experts even suggest that an emergency fund up to 12-18 months of expenses may better prepare you to weather longer stretches of market volatility.

Beyond that, controlling your expenses is crucial to building and maintaining wealth. Some expenses will be non-negotiable (like utility bills), while others may have some room for cuts (eating out). Over time, your budget can be modified as needed so you are better prepared to withstand potential fluctuations in income.

2. Review Your Risk Management Strategy

It’s important to understand the major categories of loss that could jeopardize your assets and prepare a mitigation strategy for each one. Unmanaged risk can mean the difference between maintaining an ample emergency fund or not having enough when you need it the most.

Most investors know that selling their investments during a decline is a bad investment strategy. I tell my clients that if they want to reduce risk, do it from a place of strength after their investments recover and not from a place of weakness while they are down. Only sell enough to fund income or for an unexpected expense that another source can’t fulfill. This is assuming you have a well-diversified portfolio that was aligned with your risk preference in the first place.

3. Consider Defensive Investments and Be Open to New Options

Certain dividend-paying stocks, bonds, and annuities can provide a cushion during a downturn in the financial markets. Dividend-paying stocks provide a source of income from dividend payments that can compensate for the risk of your stocks. Although dividend stocks can have limitations when interest rates decrease, so you have to be careful as well. Same with bonds as they can generate income in the form of interest payments, but, as we saw last year, can decline in value because of increasing interest rates.

We have been doing a lot of research on a couple of investments we think can provide similar upside potential as many of the balanced portfolios that we use. Insurance carriers have improved the opportunities for various types of annuities. I haven’t seen opportunities in the annuity space like they are now in over a decade, and this is a result of the increase in interest rates. A second look at annuities might be worthwhile.

Similarly, we have seen interest rates rally on CDs, fixed annuities, money markets, and high-yield savings. In fact, 4-5% on these products is not uncommon. Please give us a call to discuss this if you have more money on the sidelines than you need for emergencies.

4. Check Your Emotions

We are also facing the following challenges that worry me still: political instability, environmental instability, burgeoning national debt from unrestrained stimulus spending over the last decade, threats of nuclear war in Ukraine, eroding economic indicators, lower confidence among investment firms that I have come to know and trust, and inverted yield curves.

The beginning of these events is always different and unprecedented. It’s always different enough to feel like it’s the end of the world as we know it, and unprecedented because it’s new and confusing. But just as the crises of 2001, 2008, the COVID crash, and whatever you want to call this, it too shall pass! We have over 100 years of economic data and stock market history that demonstrates our ability to recover from extreme market fluctuations. The best advice that I can give is to live in the present uncertainty with courage and make decisions based on the evidence of history and your long-term plan.

If you stick with your financial plan, avoid panic, and have patience, history tells us that you can see investments recover and begin to rise again. It’s important to remember that declines and volatility are normal temporary sequences in the financial markets—it’s what they do—but loss is something that’s permanent and happens when you sell. It’s not wise to make short-term decisions with long-term diversified investment portfolios. These declines are not lost on your investment managers, as they have a lot of good investments on sale at a discount to take advantage of by buying as they rebalance your portfolios.

It is not easy to stay the course in the face of uncertainty, and occasionally we must dig deeper to get to the root of our fear. Sometimes it’s a feeling that our ability to achieve a certain goal is now out of reach or our control. For example, it could be a fear of missing out on bucket-list items, college for a child or grandchild, having lifetime income, or leaving a legacy to loved ones or a charity. In these circumstances, it’s very useful to engage in further discovery to discern the fear and work together to adjust your plan for pursuing these goals. These conversations and additional planning can result in greater financial peace and commitment to your investment strategy.

Hear what a few celebrity financial gurus advise during investment declines:

Dave Ramsey: “But no matter how scary the headlines are, our stance stays the same: The only people who get hurt on a roller coaster are those who jump off. Don’t forget you’re investing with a long-term outlook, and that means sticking with your investing plan whether stocks are up or down…”

Suze Orman: “Give your stocks time to recover. Could stocks keep going down? Of course. But since World War II, we have had 12 bear markets. The average loss was around 35%, and though stocks fell for an average of a bit more than a year, they typically made back their losses in another two years and then rallied to new highs. Patience will pay off.”

Liz Ann Sonders (Chief Economist at Charles Schwab): “Neither get in nor get out are investment strategies. They represent gambling on moments in time when investing should be a process over time.”

5. Get a Plan

During a volatile market, having a financial plan becomes even more crucial. Volatile markets are characterized by rapid and significant price fluctuations, increased uncertainty, and heightened risk levels. In such conditions, a financial plan can provide stability and guidance, for individuals and businesses.

Benefits of a Financial Plan

  • Helps define short-term and long-term financial goals: In a volatile market, having clear goals helps you stay focused and avoid impulsive actions driven by short-term market fluctuations.

  • Keeps investment decisions in line with objectives: A financial plan determines the suitable asset allocation based on your risk tolerance, time horizon, and financial goals. It ensures your portfolio is properly balanced across various asset classes like stocks, bonds, cash, and alternative investments. Volatile markets often lead to short-term market fluctuations and noise that can cloud judgment.

  • Provides a road map for pursuing goals: A financial plan is not a static document but a dynamic process that needs to be reviewed and adapted periodically, especially during volatile markets. Regularly assessing your plan allows you to make necessary adjustments, rebalance your portfolio, and capitalize on new opportunities that arise from market volatility.

  • Encourages a long-term perspective: A financial plan helps you stay focused on your goals, avoiding knee-jerk reactions to market volatility; market fluctuations are a normal part of investing, and maintaining a disciplined approach can be a key to long-term success.

In summary, a financial plan is essential during a volatile market; providing structure, risk management, and a long-term perspective, helps you navigate uncertain times, make informed decisions, and stay on track toward your financial goals.

We Are Here to Help

Managing your wealth during times of market volatility may seem daunting, but it doesn’t have to be. With the help of experienced financial professionals, preserving your assets can be a manageable task. If you’re feeling uneasy about the current market conditions and would like a second opinion, we invite you to connect with us. To schedule a complimentary call to discuss your current financial planning considerations or investment concerns and see if our services are a match for your needs, contact us today at or (407) 542-3249. You can also send us a message here and we can create a customized wealth management strategy to help withstand the ups and downs of the market.

About David

David is President and CEO of Investment & Insurance Planning Services, LLC (IIPS), an independent and fee-based firm that helps clients establish their financial goals and creates custom financial plans to help them pursue those goals. They specialize in working with pre-retirees, individuals in a career transition, L3 Harris engineers, and JetBlue pilots. David’s motivation comes from seeing his clients pursue their goals. He says, “It’s very rewarding to help people make successful transitions from one career to another, start a small business, or retire.”

David received his bachelor’s degree from Troy University, and prior to becoming a financial planner in 2000, he had a nine-year career in the United States Coast Guard. He obtained the CERTIFIED FINANCIAL PLANNER™ designation in 2007. He has served as the guest financial expert on Orange Television’s Adult Lifestyle Magazine Show and frequently provides financial and retirement planning workshops. Outside of work, he enjoys spending time with his wife, Michelle, their two kids, Ryan and Alana, their dog, Jack, and visiting with friends. An avid outdoorsman, he enjoys fishing, hiking, exercise, and as a committed person of faith, he enjoys attending church and is passionate about helping people in his community. To learn more about David, connect with him on LinkedIn.

This material was prepared for David Blount’s use.

Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.

The economic forecasts set forth in this material may not develop as predicted and there can be no guarantee that strategies promoted will be successful.

There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk. Asset allocation does not ensure a profit or protect against a loss.

Dividend payments are not guaranteed and may be reduced or eliminated at any time by the company.

CDs are FDIC insured to specific limits and offer a fixed rate of return if held to maturity.

Annuities are not FDIC insured. Annuities are long-term, tax-deferred investment vehicles designed for retirement purposes. Gains from tax-deferred investments are taxable as ordinary income upon withdrawal. Withdrawals made prior to age 59 ½ are subject to 10% IRS penalty tax. Surrender charges apply. Guarantees are based on the claims paying ability of the issuing insurance company.

Bonds are subject to market and interest rate risk if sold prior to maturity. Bond values will decline as interest rates rise and bonds are subject to availability and change in price.

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