Photo of a man who is maintaining his investments during market volatility.

Market volatility: How staying invested may help you in the long run

In an ideal world, investors buy low and sell high. 

In the real world, investors often do the exact opposite—buy high and sell low—especially during volatile times. We see stocks going up and down because of the coronavirus or political uncertainty, and our brains say “run.”

Tempting? Yes. You’re trying to make the right decisions for the retirement, 529 savings plans, and other investments your family is counting on. But in the long run, you’re generally better off staying the course rather than trying to jump out, then back into, the market.

That’s because it’s never about timing the market. It’s more about time in the market.

The power of staying invested during market volatility

During volatile times, it can seem (really) appealing to change how you invest in hopes of a better return. Let’s look at a case study of how timing the market could impact your retirement savings.

In 2008 and 2009, we experienced a period of extreme market volatility due to the explosive growth of the subprime mortgage market.

Case study: Timing the market

  • Imagine it’s January 1, 2008, and you have $100,000 invested in the market, and the bumpy ride drops you down to $64,388 balance in one year.1
  • So, frustrated by the declining value of your investment, you take that remaining $64,388 out of the market. You decide to go with a more “stable” investment, putting your money into a guaranteed interest investment (a CD) with a 2% return for the next five years. During those five years, with the guaranteed interest, your balance increases to $71,090.
  • But what if, in 2009, you decided to ride out the ups and downs and kept your money invested in the market instead? By staying in the market, based on S&P Index returns at that time, you would have had $123,862 after five years.

Putting money in a CD vs. staying in the market (2008 to 2013)2

Bottom line in this case study: You could have had $52,772 more if you’d stayed in the market instead of moving your money into a CD.

Market volatility: ideas to help you stay in control

Set a goal.

Saving for retirement generally requires you to trade near-term gains for what may be long-term benefits. Having a goal and sticking with it may help you keep perspective during ups and downs.

See where you stand.

Check your Retirement Wellness Score to see how you’re doing with your retirement savings. Visit

Think about your risk tolerance.

Make sure you have the right investment mix based on how comfortable you are with risk and how long you have until you retire. Log in and take our quick quiz to see if the risk level of your investments fits your investing profile.

Rebalance your investments.

Over time, the value of your investment mix (“asset allocation”) can change as some investments grow more than others. Rebalancing sets everything back to your original mix and may minimize the impact of market volatility.

Lean on a financial professional.

Get help from the experts. A financial professional can help you plan and deal with the ups and downs of the market and update or create a personalized financial plan. (See more information below under “Next steps.”)

To learn more, watch the video Market Volatility and Recessions 101.

What a financial professional says about today’s markets

We asked Stanley Poorman, CFP®, advice and planning manager at Principal®, what he’s telling clients during these times of market volatility.

1. Stay the course.

“The ironic thing is that volatility, the very thing that we worry the most about, is exactly what we should embrace. It may feel uncomfortable, but it can create opportunities for long-term growth,” Poorman says. Let’s say you sell your investments. “You most likely rode the market down. At what point will you know when to get back in?”

He says the bottom of a bear market is the point in time when you’ll feel the worst and be the least optimistic. You aren’t likely to get back in at that point, which means you may miss out on a significant portion of the recovery.

2. Review your goal, risk tolerance, and time horizon.

Poorman says to ensure your asset allocation continues to be in line with your long-term goal.

“If it’s still lined up with your goals, then you likely don’t need to make changes and you can ride out the market volatility. If it’s not, then realigning your allocation based on your goals, risk tolerance, and how long until you’ll need the money will help you achieve long-term success,” Poorman says.

3. Don’t open your statements or check the app. (Really.)

You have instant access via apps, but that doesn’t mean you should be checking your accounts every day.

“Your focus is on 10, 20, or 30 years down the road,” Poorman says. “We live in a 24/7 news cycle, and that makes it tempting to react to everything you hear. What can feel like a big moment at the time, over the long term, may be remembered as just a blip on the radar screen.”

In the last 150 years in the United States, we’ve been through wars, pandemics, and political changes. What happened with each downturn? The market met its floor and recovered. Even the worst market declines have generally been followed by a significant recovery. A year after the market dropped in 2008/2009, it rebounded by 53.5%.3

4. Focus on what you can control.

That’s your day-to-day finances. “Set up a budget. Build up your emergency fund. Pay down debt. Those are things you can do now—no matter what markets are doing—to help improve your family’s financial situation,” Poorman says.

5. Invest, if you can.

Money to spare from a tax refund, a bonus, or unexpected windfall? It may be a good time to invest. (You know what they say: Buy low, sell high.)

Graphic of a thumbtack. Tip: We’ve got your back, financially. But to learn more about the coronavirus and keeping your family healthy, follow the Centers for Disease Control and Prevention (CDC) and the World Health Organization (WHO).

Next steps:

1 Example for illustrative purposes. Based on S&P Index returns as of December 31, 2007 through December 31, 2008.

2 Example for illustrative purposes. Returns related to a 2 percent interest-bearing CD. Market returns based on S&P index returns as of December 31, 2008 through December 31, 2013. Past performance does not guarantee future results.

3 Instances of high double-digit returns were achieved primarily during favorable market conditions and may not be sustainable over time. Past performance is not a guarantee of future results. Source: Wilshire Compass. Reflects S&P 500® Index returns. The S&P 500 is an unmanaged index and investors cannot invest directly in an index.

This document is intended to be educational in nature and is not intended to be taken as a recommendation.

Investing involves risk, including possible loss of principal.

Asset allocation and diversification do not ensure a profit or protect against a loss.

Performance of indexes reflects the unmanaged result for the market segment the selected stocks or bonds represents. There is no assurance an index-based investment option will match the performance of the index tracked.

The Retirement Wellness Planner information and Retirement Wellness Score are limited only to the inputs and other financial assumptions and is not intended to be a financial plan or investment advice from any company of the Principal Financial Group® or plan sponsor. This calculator only provides education which may be helpful in making personal financial decisions. Responsibility for those decisions is assumed by the participant, not the plan sponsor and not by any member of Principal®. Individual results will vary. Participants should regularly review their savings progress and post-retirement needs.

Insurance products issued by Principal National Life Insurance Co (except in NY) and Principal Life Insurance Co. Plan administrative services offered by Principal Life. Principal Funds, Inc. is distributed by Principal Funds Distributor, Inc. Securities offered through Principal Securities, Inc., 800-247-1737, member SIPC  and/or independent broker-dealers. Principal National, Principal Life, Principal Funds Distributor, Inc. and Principal Securities are members of the Principal Financial Group®, Des Moines, IA 50392.