While market dips can be stressful in the moment, these are short-term movements that you really shouldn’t worry about, Molina warns, as they are out of your control.
“These day-to-day fluctuations mean very little to the long-term accumulation of your investments and shouldn’t impact your overall strategy,” he explains.
“After seeing a recent sell-off of tech stocks in particular, this is a good reminder about the importance of diversification when investing,” Molina adds. “Putting the vast majority of your investments in a diversified portfolio can help protect you from the potential negative consequences of one or two sectors taking a larger downturn.”
With diversified funds, your money is spread across various securities, so it’s more likely that when some stocks in your portfolio go down, other will go up and balance out the loss. Instead of putting your money in individual stocks where the risk is concentrated to that one company, invest in a large number of companies through pooled investments like mutual funds and ETFs that a broker offers.