Investing during times of uncertainty

In the run-up to the 2020 election, many investors are wondering what to expect. Generally speaking, markets dislike uncertainty—and in times of heightened uncertainty, stock prices may swing a bit more. That’s what we saw in March, when the pandemic took hold in the US.

Here are some things for you to keep in mind:

• Volatility can impact your investments. However, it tends to ebb and flow. If you’re new to investing, remember that stocks go up and down. While it’s no guarantee, history suggests that heightened market turmoil eventually subsides.
• You may diversify your holdings. Some investors try to reduce the effects of volatility on their portfolios through diversification. (This is a fancy way of saying be mindful of “putting all your eggs in one basket.”)
• Keep perspective. It’s important to understand your goals, time horizon, and risk tolerance, so you can make smart financial decisions. While it can be stressful if the market drops, historically there is evidence that long-term investors could have done better if they stayed the course. [1]

As always, thank you for being a Robinhood customer—and don’t forget to cast your ballot.

References

[1] Morningstar. “3 Charts That Show Why Investors Should Stay the Course Throughout Market Turmoil.” Published March 16, 2020. Accessed Oct. 16, 2020.

All investments involve risk and loss of principal is possible. Diversification does not ensure a profit or protect against losses in declining markets. Past performance is no guarantee of future results.

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