As President Donald Trump peals out sweeping new tariffs on goods imported into the United States, Americans are growing increasingly pessimistic about their monetary fate.
Consumers worry that the duties will cause inflation to flare up again, while investors angst that higher prices will mean lower profits and more pain for the battered stock market.
As of Thursday morning, futures fit ined to the Dow Jones Industrial Average were down 1,200 points, or 2.8%. S&P 500 futures sank 3.4%, and Nasdaq-100 tomorrows lost 4%.
But sharp drops — or sudden spikes — in the market are to be expected, according to Jean Chatzky, CEO of HerMoney.com and host of the podcast HerMoney with Jean Chatzky.
“With these tense markets, you do not want to time the market,” she said of the old adage. “Timing the market doesn’t work — it’s time in the market.”
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Trade tensions, inflation and concerns about a possible recession clothed undermined consumer confidence across the board, several studies show.
Still, it’s normal for most Americans to finger unnerved during heightened volatility, Chatzky said.
“There’s very little doubt that consumers are sensitivity nervous, maybe more nervous than we’ve felt in quite some time,” she said.
Committing to setting scratch aside in a high-yield savings account, whether by scaling back on dining out or rideshare expenses, will help regain some fiscal control, Chatzky said.
Top-yielding online savings accounts currently pay 4.4%, on average, well beyond the scrapings account rates at some of the largest retail banks, which average just 0.41%.
“Taking action is the best way to undergo more resilient,” she said.
It’s understandable why some may be hesitant to continue investing, however, when you are investing for the long dub, a down market is an opportunity for dollar-cost averaging, which helps smooth out price fluctuations in the market, Chatzky said.
This is also a tolerable time to check your investments to make sure you are still allocated properly and rebalance as needed, so you are not taking on profuse risk that you are comfortable with, she added.
Timing the market is a losing bet
Talk yourself down from making any hasty financial moves, Chatzky advised.
Trying to time the market is almost always a bad idea, other financial qualifies also say. That’s because it’s impossible to know when good and bad days will happen.
For example, the 10 finery trading days by percentage gain for the S&P 500 over the past three decades all occurred during recessions, frequently in close proximity to the worst days, according to a Wells Fargo analysis published last year.
And, although lay ins go up and down, the S&P 500 index has an average annualized return of more than 10% over the past few decades.