Staying Invested Amid Market Volatility

May 19, 2025

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Any day that the financial markets are open, it’s normal to see your investment value going up and down as prices of stocks and bonds fluctuate throughout the day. When there is a big down swing in your portfolio’s value, however, it can be easy to let emotions take over and drive your investment decisions.

For instance, some investors might be tempted to pull their money out of the market and move to cash. Others may feel the need to alter or abandon their original investment strategy to try and avoid further losses.

However, during times of significant volatility, it’s more important than ever to take pause and avoid making decisions out of fear or panic. Market volatility over the short term is normal. And while it’s easier said than done, it’s oftentimes best to stay invested and maintain a long view.

Keep in mind:

Many diversified portfolios, like retirement plans, are built with a long-term strategy and designed to weather short-term volatility.
It’s hard to predict the movements of the market in the short term, and trying to time the market may result in realizing losses or missing potential long-term growth opportunities.
Making certain portfolio changes or sudden withdrawals could have tax consequences.

Let’s go over these points in turn.

1. A diversified portfolio can help you weather market volatility

A key to investing is understanding how to appropriately manage volatility and other risks.

One way to do so is to make sure you have a diversified portfolio with a balanced investment mix, so that your money isn’t overexposed to any individual stock, industry, or region. While diversification can’t eliminate all risks or protect you from losses, it can help you manage and potentially reduce the day-to-day volatility you see in the markets.

During times of volatility, it’s a good idea to revisit your portfolio and make sure your asset allocations are appropriate for your goals, risk tolerance, and time horizon.

2. Don’t try to time the market: Stay focused on your long-term strategy

Markets are driven by a variety of factors, and while investors may try their best, it’s hard to consistently be right in predicting market behavior and prices in the near term. A strategy of attempting to time market highs and lows – like trying to buy the dip or sell high – can backfire, leading you to lock in losses and miss potential growth opportunities.

When markets are volatile, it’s usually best to stick with your long-term investment strategy even when there are bumps in the road.

For many investors – especially those with a long time horizon – keeping calm and riding out the volatility can be a smart strategy. Historically speaking, markets reward patience and investors who take the long view. That’s why the longer you’re able to stay invested, the better your chances of reaching your investment goals.

Bottom line: It’s more about time in the market as opposed to trying to time the market.

3. Making certain portfolio changes or sudden withdrawals can be costly

Another reason to resist the urge to make sudden portfolio changes or withdrawals out of market fear or panic is that even small changes could have tax consequences.

For instance, if you have a taxable individual account and decide to change up your asset allocations (perhaps in an attempt to prevent further losses), be aware that certain allocation changes might require the sale of some assets in order to update your portfolio. And asset sales where you have realized gains may trigger capital gains tax.

Tax considerations are also something to be mindful of with retirement account withdrawals. Generally, if you withdraw money from an IRA before age 59 ½, the withdrawal may be subject to an early withdrawal penalty (visit IRS.gov for more information). Remember, the money in your IRA or 401(k) is for retirement, and ideally, you don’t want to touch that until your golden years.

Bottom line: Making certain portfolio changes could impact your tax bill. It’s always a good idea to consult a tax professional if you have any specific questions about your situation.

Final thoughts

Of course there will be times when making portfolio changes or withdrawals may make sense – like if you have a major life event that alters your investment goals, risk tolerance, or time horizon. As your goals change, your investments should reflect those changes.

However, don’t let market fear or panic take over your investment decisions. While market downturns can make even experienced investors feel uneasy, they can present opportunities as well.

Consider setting up a meeting with your financial or investment advisor to review your current plan and discuss potential ways to take advantage of lower prices during a down market. They can also offer valuable guidance to help you keep perspective as well as stay confident and on track toward your goals.

This article is for informational purposes only and shall not constitute an offer, solicitation, or recommendation. This article was prepared by and approved by Marcus by Goldman Sachs® but is not a description of any of the products or services offered by and does not reflect the institutional opinions of The Goldman Sachs Group, Inc., Goldman Sachs Bank USA, or any of their affiliates, subsidiaries or divisions. Goldman Sachs Bank USA is not providing any financial, economic, legal, accounting, tax or other recommendation in this article and it is not a substitute for individualized professional advice. Information and opinions expressed in this article are as of the date of this material only and subject to change without notice. Information contained in this article does not constitute the provision of investment advice by Goldman Sachs Bank USA, or any of its affiliates, none of which are a fiduciary with respect to any person or plan by reason of providing the material or content herein. Neither Goldman Sachs Bank USA, nor any of its affiliates make any representations or warranties, express or implied, as to the accuracy or completeness of the statements or any information contained in this document and any liability therefore is expressly disclaimed.