If you’ve checked the headlines lately, you know the markets have been anything but calm. With renewed volatility, inflation ticking back up, and interest rates easing more slowly than hoped, investors are left wondering: Is this a dip, or something deeper?

It’s a familiar but uncomfortable pattern, one that underscores just how important a long-term strategy really is.

At Ironwood Wealth Management, we believe smart financial planning means preparing for uncertainty — not just riding the highs, but managing through the lows. Here’s what to do (and what not to do) during a down market to protect your portfolio and your peace of mind.

What Is a Bear Market?

A down market, often referred to as a bear market, is a sustained period during which stock prices, bond prices, or broader market indexes decline by 20% or more from recent highs. These downturns can be triggered by a range of factors, including slowing economic growth, rising interest rates, disappointing corporate earnings, or shifts in investor sentiment.

The good news? These periods are a normal and expected part of long-term investing. While they may feel unsettling in the moment, history consistently shows that down markets are temporary and often followed by strong recoveries.

1. Do: Revisit Your Long-Term Financial Plan

When markets fall, it’s tempting to zoom in on short-term losses. But successful wealth management is built around long-term goals, not week-to-week performance.

What to focus on:

  • Revisit your financial goals and time horizons
  • Make sure your investment strategy reflects your current income, family needs, and future ambitions
  • Stay anchored to your personal plan, not the latest headlines

If your goals haven’t changed, a market dip alone may not warrant major adjustments.  Still, this is a smart time to check whether your strategy aligns with your current income, risk tolerance, and overall financial picture.

2. Don’t: Make Emotional Financial Decisions

Fear and anxiety are natural reactions to market swings, but emotional decisions often lead to permanent mistakes.

Knee-jerk reactions can cause investors to:

  • Sell stocks that are down and lock in permanent losses
  • Miss the sharp rebounds that often follow a down market
  • Trigger unexpected tax bills through poorly timed sales
  • Disrupt a carefully built investment strategy

Instead, pause, breathe, and talk to your advisor before making any significant changes.

3. Do: Stay Invested During Volatility

It’s easy to forget that the early stages of a recovery often deliver some of the biggest gains, and missing them can significantly hurt long-term returns.

For example, following the rapid declines of early 2020, investors who stayed invested saw the markets recover to their previous highs within the year. Those who tried to time the bottom often missed key recovery days, reducing their returns.

Remain invested in a strategy that aligns with your goals, risk tolerance, and liquidity needs, even when the ride feels bumpy.

4. Don’t: Try to Time Market Bottoms

If professional fund managers with teams of analysts and mountains of data can’t consistently time market bottoms, odds are individual investors won’t either.

Why trying to time can fail:

  • Market recoveries are unpredictable and can happen swiftly
  • Emotional biases often push investors to sell low and buy back too late
  • Frequent trading can rack up fees, taxes, and lost opportunities

Focus on what you can control: maintaining your allocation, rebalancing when needed, and investing systematically over time.

5. Do: Look for Strategic Investment Opportunities

Down markets create windows for strategic moves that aren’t always available — or as impactful — during good times. Some potential opportunities include:

Tax-loss harvesting: Realize losses in taxable accounts to offset gains and potentially reduce your tax bill.

Buying quality assets at lower valuations: During downturns, financially sound companies, real estate, and funds often sell at significant discounts.

Roth IRA conversions: Converting at temporarily lower portfolio values can mean paying less tax today to enjoy tax-free growth tomorrow.

Portfolio rebalancing: Downturns can throw your portfolio off balance. Rebalancing helps realign your strategy by adding to undervalued areas and trimming overexposure elsewhere.

Partner with your financial advisor to identify which moves make the most sense based on your goals and risk appetite.

6. Don’t: Ignore Your Overall Risk Profile

Market stress often reveals mismatches between your true risk tolerance and the design of your portfolio.

Questions to reflect on:

  • Am I more uncomfortable with market swings than I expected?
  • Have my goals or time horizon changed?
  • Is my portfolio diversified adequately across asset classes?

A downturn may not mean you need drastic changes, but it could be the right time for a proactive portfolio review.

7. Do: Stay Connected With Your Advisor — and Your Plan

Uncertain markets can stir up fear, but you don’t have to navigate them alone. A seasoned advisor can help you cut through the noise, stay grounded in your long-term strategy, and uncover smart opportunities. At Ironwood Wealth Management, we work with clients to:

  • Understand market shifts in context
  • Revisit and reinforce financial plans
  • Stay focused on long-term goals, not short-term swings

Market downturns are a normal part of the investment cycle, and in U.S. market history, each one has eventually given way to new periods of growth. The most successful investors aren’t the ones who dodge volatility, but the ones who stay disciplined through it.

Let’s review your plan together and keep your future on track. Schedule a consultation with our expert advisors today.