You may be tired of hearing the term, “Stay the course,” but history has shown that those who create a sound investing plan and stick with it have fared well over the long term.

Even in the midst of market turmoil, the same investing principles prove out. Buying shares when they’re flying high and selling them when they’re rocky doesn’t add up to a sound investment plan.

Here are three things you can do now to help ride out the current market turbulence.

1. Examine Your Plan

2. Make Your Money Work for You

3. Get Real About Your Risk Tolerance

1. Examine Your Plan

When you’re in the heat of a fire is not the best time to realize you don’t have an established escape plan. If you have been riding high on past market success without ever establishing a sound investing plan, there are some steps you can take to get through today’s fire drill and better prepare for your financial future.

• Make sure all your eggs aren't in one basket

If you’re too heavily exposed to equities in stock funds, you may want to start slowly shifting a portion of your money to fixed-income funds, including ones that invest in Treasuries, which are backed by the full faith and credit of the U.S. government. And, within each asset class, it’s a good idea to diversify among different types of investments, including funds that diversify your portfolio among different company sizes, sectors, styles of investing, types of bonds, etc. 

• Check your asset allocation balance

Asset allocation refers to the amount of your investments you have allotted to different asset classes—stock, fixed-income (bond) and money market funds. Depending on your risk tolerance and time horizon, you should consider having a specific percentage allocated to each type of investment. For example, a typical moderate investor could have 60% in stock funds, 30% in bond funds and 10% in money markets. Some fund companies offer asset allocation funds that are already diversified for you. Use our Find a Fund tool to screen for “Asset Allocation” under Categories.

• Don’t let your emotions get the best of you

Again, the same guidance that applies during good financial times applies during uncertain ones. It can be hard to start or increase saving when you’ve become accustomed to a certain standard of living (or just keeping your gas tank full). It’s okay to start small. The goal is to start, and not to stop. The Find a Fund tool can help you locate funds that allow you to start investing with as little as $50 a month.

2. Make Your Money Work for You

One of the easiest ways to take emotion out of investing is to automatically invest a certain amount of your paycheck each pay period. Most investment firms have automatic investing programs that help you do this. Contact fund companies directly to inquire about this service.

Automatic investing lets you take advantage of dollar-cost averaging. While it doesn’t feel good to lose a huge chunk of value in your portfolio due to a downturn in the market, you could consider it a positive. You have the opportunity to buy more shares for less money, and when the markets recover, you have the potential for appreciated value on those shares you bought at bargain basement prices.

The crucial factor is to pay attention to the fundamental strength of an investment over the long term, not what the current shares are selling for. If you are uncomfortable making these decisions by yourself, it can be well worth the price of a financial professional’s services. Contact your fund company to find out if they offer advice, or contact one of the following organizations.

• National Association of Personal Financial Advisors
• Financial Planning Association
• International Association of Registered Financial Consultants

3. Get Real About Your Risk Tolerance

It’s easy to invest aggressively when the markets are riding high, but now that there’s been a major hiccup in financial markets, how are you stomaching it? Are you losing sleep at night or having severe anxiety?

If you’ve bitten off more risk than you can chew, now is the time to get real about how comfortable you actually are with risk. While the value of your investments may be down, it could be worth moving some of your riskier investments into ones with lower risk for your own peace of mind. 

The key to reallocating while the market is down is to think about making small changes over time. Once you achieve a comfortable asset allocation that fits your new risk tolerance, financial experts recommend you rebalance once a year to ensure you stay within your predetermined mix. For example, if your fixed-income investments have gained in value and your stock investments have declined, consider selling some fixed-income investments and purchasing more stock investments to keep the proper balance.

This strategy focuses on selling investments when they’re high and buying investments that are currently low. While this is not a novel concept, it’s one that many investors fail to do. Any change can be hard, but with a little discipline, you can reap the benefits of these tried-and-true investing principles.

This article is for educational purposes only and should not be considered investment advice. Contact a financial professional or your fund company for information specific to your investments.