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How to navigate market volatility, according to a financial advisor

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Lazetta and Associates CEO on weathering market volatility

When the market is volatile, it’s important to be mindful of your other assets and think of your portfolio in a holistic way, said certified financial planner Lazetta Rainey Braxton, co-founder and co-CEO of virtual advisory firm 2050 Wealth Partners.

“When we are thinking about market volatility, that means that there is uncertainty about what direction the market will go and how that will impact our clients,” said Braxton, who is a member of CNBC’s Financial Advisor Council.

Investors need to be clear where they stand on risk, based on their goals, Braxton added. Your best bet is to look at the diversification in your portfolio, rather than focusing exclusively on the market’s direction.

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“It’s so important to think about your financial future from a holistic perspective,” said Braxton. “If you focus only on investments, you’re going to drive yourself as crazy as the markets are.”

‘Don’t get so wrapped up in the markets’

Your broader portfolio consists of all of your assets, said Braxton. In addition to what’s invested in the market, those assets might include cash savings, real estate and your human capital.

“Don’t get so wrapped up in the markets,” she said. “Best protect you, your money and your legacy.”

Keep your home and human capital in mind when you strategize your financial plan, she said. Protect your assets with insurance, including life insurance and policies to protect your home, auto and other possessions. Invest in your human capital by refining your skills to preserve your main source of income, especially in economic downturns.

Cash is also important to ensure you have liquidity. That way, you’re not forced to sell investments at an inopportune time, she said, “in case the markets get tough.” Even though inflation is likely to erode the value of those savings, protecting your liquidity will help you spread out the risk.

“It’s good to have balance and think about your portfolio of assets in a diversified way,” said Braxton.

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