18 Apr Should I change my allocation given stock market volatility?

Q. I know, I know. I’m supposed to look long-term but all the stock market volatility is finally getting to me. But I’m afraid if I move to a less aggressive asset allocation, I will lose out when the market comes back. What should I look at?
— Investor

A. Yup.

Few people are comfortable with the recent stock market volatility.

Your concern is completely understandable and you are not alone, said Victor Cannillo, founder of Baron Financial Group in Fair Lawn.

He said the important thing to focus on is your long-term strategy and try to keep emotions out of investing.

Ask yourself: Are you in a risk-appropriate investment strategy? Do you have a financial plan?

Cannillo said it is important to note that your risk tolerance is based on two factors – your willingness and ability to take risk.

“Your willingness to take risk is based on your personal feelings in reaction to the changes in investment values as markets move through different cycles,” he said. “Most people have a general idea of how willing they are to accept risk and are familiar with terms like conservative, moderate or aggressive.”

There are questionnaires available online to help you identify your willingness to take risk.

Then, your ability to take risk. This is based on what level of portfolio risk gives you the best chance to achieve financial success, he said. In simple terms, what investment strategy will help your money last longer?

Cannillo said having a comprehensive financial plan that includes your lifestyle needs and your resources, including your investment portfolio, to meet those needs is very important.

“The plan should have the ability to calculate different scenarios, including the impacts of using different levels of risk with your investments and how your portfolio would fare in different market environments,” he said.

Consider working with a financial professional who can help you develop a financial plan with your specific goals and needs in mind.

Email your questions to Ask@NJMoneyHelp.com.

This story was originally published in April 2025.

NJMoneyHelp.com presents certain general financial planning principles and advice, but should never be viewed as a substitute for obtaining advice from a personal professional advisor who understands your unique individual circumstances.