The "Dos" and "Don'ts" of Investing During a Volatile Market

Do Follow These Guidelines

Periodically review your portfolio with your financial advisor
Talk to your financial advisor at least once a year, and when you have a significant life event or are particularly uneasy about the market.

Maintain realistic expectations
Understand the balance between risk and reward, and be realistic about what it may take to reach your goals. You should also resist media hype—talking with your financial advisor can help you determine what’s really important.

Diversify
A diversified portfolio can include stock, bond and cash investments in different proportions. By holding a variety of investment styles, your portfolio may be positioned to potentially ride out market fluctuations over the long term.

Avoid the Following

Don’t overlook deferred sales charges, withdrawal penalties, tax consequences, and the potential for missed gains
These factors can take a considerable bite out of any perceived benefit of selling shares. Your financial advisor can help you weigh the costs and benefits of your individual situation.¹

Don’t try to chase performance
Trying to time the next “hot” investment is a losing game. Instead, consider dollar-cost averaging. This strategy allows you to invest a fixed dollar amount into a mutual fund at regular intervals, regardless of market movements. As a result, you’ll end up purchasing more shares when prices are lower and fewer shares when prices are higher. In other words, your average cost per share may be lower.

Keep in mind that a program of regular investment, such as dollar-cost averaging, cannot ensure a profit or protect against a loss in a declining market. Because this strategy involves continuing contributions regardless of fluctuations in values of your mutual fund shares, you should consider your ability to continue the program through periods of high and low prices.

¹ Van Kampen does not provide tax advice.

If you are concerned about your portfolio’s volatility, contact your financial advisor. Your financial advisor can help you maintain realistic expectations about balancing risk and reward.