economy
Managing your money when geopolitical risk and volatility are high
It’s hard not to be worried by the avalanche of upsetting news stemming from the decision of the US and Israel to launch a war on Iran.
TL;DR
- The war in Iran may cause higher market volatility and gas prices in the US, with risks of inflation and recession.
- Historical perspective shows markets recover from crises, wars, and pandemics.
- Staying invested in a diversified portfolio historically outperforms trying to time the market.
- Investors should avoid focusing too narrowly on single news items, as markets are influenced by multiple factors.
- For long-term investors with diversified portfolios, sitting tight might be the best strategy.
- Younger investors with higher stock allocations will see more volatility, which is normal for long-term growth.
- Those near retirement should have a conservative allocation, with a portion in cash or cash-like instruments.
- Periods of financial market disruption can be opportunities to buy more investments at lower prices.