Tips To Strengthen Your Financial Foundation In a Volatile Market

When the market gets shaky, the instinct is to do something. Check your portfolio, read the news, move things around. Mostly that just wastes your time and sometimes costs you money.

What actually helps is having a setup that doesn’t require you to react.

Look at your debt without judgment

Sit down one evening and write down every debt: the balance owed, interest rate, and minimum payment. That’s the whole exercise. 

The actual numbers are usually more actionable than a rough mental estimate. Plus, guessing just causes anxiety you don’t need.

Focus on making extra payments on the highest interest rate items first, usually credit cards at 20–25% APR. A card at 22% is costing you more than almost any investment that is creating income for you. Paying the credit card balance down is a guaranteed return.

Think about setting up an automatic payment once a week, say Fridays, that’s more than the interest. It doesn’t have to be a dramatic amount, just something you can afford that drives down the balance (and doesn’t just pay the interest). 

Pause and review big purchases

Before making any major purchase right now, check to see if the pricing and financing terms still make sense given current market conditions. 

What felt like a reasonable car payment or appliance financing plan six months ago may look different today if interest rates have shifted or your income has become less predictable. A brief pause to compare options and confirm the terms still work in your favor is one of the simplest ways to protect your financial foundation during uncertain times.

Automate one thing and stop deciding

The goal isn’t to make better money decisions every week. It’s to make fewer decisions in total. 

Set up a small automatic transfer to savings or investments — even $50 or $75 — on a set schedule. When it runs on its own, you stop debating whether you can afford it. It just happens automatically.

And if your income isn’t steady, use percentages instead: 50% to bills, 20% to spending, 20% to debt, 10% to investing. Everything works together automatically.

Keep your investments simple

Volatile markets generate a lot of opinions. Most aren’t worth acting on. 

Broad diversified funds are low cost, require no stock-picking, and don’t need your attention every week. These include stock market indexes that are used by many firms to diversify investments for individuals but they provide a safe balance without being too aggressive or conservative.  Unflashy, but genuinely solid investments. 

What’s the money for? Long-term money can ride out a downturn in the economy. But short-term money used to cover anything you might need in the next year or two, shouldn’t be in the market at all. Keep those buckets separate and a bad month won’t force your hand.

If you’re wondering whether now is a bad time to start, the market will always give you a reason to wait. There’s just no perfect timing. Think of it this way: Time in the market matters more than timing the market.

(Check out my post The Portfolio Moves That Pay Off When Markets Get Weird.)

Retirement planning

If you qualify, Roth IRA and Roth 403(b) plans can be two of your smartest retirement moves. Many Roth IRA accounts give you the option of selecting diversified investment options from aggressive to conservative investments that grow over time. They’re tax-advantaged accounts that provide you the opportunity to grow your savings tax-free.

Check out our blog article that compares both types of IRAs to see which one might be right for you. 

And, if you are also considering a 401(k), check out this article, which compares Roth IRAs to 401(k) accounts.

Know what triggers a tax bill

Understanding capital gains rates and resisting the urge to react to market swings can save you significantly come tax time.

When you sell an investment at a gain, that’s taxable income. Hold it under a year and it’s taxed at your ordinary tax rate. Over a year and it’s taxed at capital gains rates which are lower than your ordinary income tax rate. 

This is worth knowing before a rough market month tempts you to move everything around. Reacting fast can cost you twice: once on the sale and once on the taxes.

Also, keep in mind that dividends and reinvested interest also count as taxable income in the year you receive them, even if you never touch the money.

For a deeper look, check out: Essential Tax Tips for Maximizing Investment Gains. 

And check out how to enter capital gains and losses directly in TurboTax. 

You’re closer than you think

List your debts. 

Automate one transfer. 

Put long-term money somewhere diversified and leave it alone. 

Know the tax consequences before you sell. 

Those are the most important things to think about. No perfect timing required, just a few quiet habits doing their thing, regardless of an uncertain market. 

You don’t have to go at it alone. If you want a second set of eyes, with TurboTax Expert Assist Premium, you can connect with a tax expert who understands investments and can review, or even fully prepare your return when it’s tax season.