As tariff-driven price hikes rattle the stock market, it’s easy to feel like your financial stability is also at risk, especially if your portfolio dips. However, market swings tied to global trade tensions don’t have to derail your long-term financial goals.
Experts recommend some strategies to shore up your finances and stop you from reacting from a place of panic.
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The best immediate response to a shifting market is assessment, not panic, according to Jean-Baptiste Wautier, a financial and global economic policy leader at Wautier Family Office.
A common mistake in volatile times is “reactive decision-making,” he said, which might include selling off investments impulsively or attempts to “time the market,” pulling funds in and out too frequently, which rarely works.
He recommended reviewing your portfolio’s exposure to sectors directly impacted by tariffs, such as manufacturing or international trade.
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“Diversification is key,” he stressed. “Ensure your 401(k) or IRA isn’t overly concentrated in a single sector or geography. Long-term retirement plans should remain focused on balanced, time-horizon-appropriate asset allocation, not short-term policy shocks.”
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Consumers have already likely noticed the obvious signs of potential market volatility, such as the rising costs in consumer goods, as the result of recent tariffs. However, it’s a good idea to also pay attention to other “major indices” such as the S&P 500, the Nasdaq and similar, Wautier said. Drops in these cue “that broader economic sentiment and, by extension, personal finances may be impacted,” he said.
However, everyone’s investments will be affected “in an idiosyncratic way,” according to Jason DeLorenzo, owner and principal at Ad Deum Funds. “You must research the stocks you hold, and determine if they are foreign or domestic in nature, and act accordingly.”
Your goal is to make sure your investments are not damaged by tariff-driven price increases.
With the help of your financial advisor, or careful research, investors can consider shifting some of their holdings “toward sectors more insulated from global trade tensions, such as domestic utilities, healthcare or technology with minimal foreign dependencies,” Wautier said.
Incorporating alternative assets or bond funds can also help reduce volatility. However, he urged that any shifts or reallocations be part of a broader strategic review, “not a knee-jerk reaction to headlines.”
Since the dollar tends to depreciate due to “capital flight,” which can create a bond and equity selloff, DeLorenzo said that “during these times, commodities and metals are the best places to hold your money.”
While you may not have much control over your portfolio other than moving things around, you can make sure you have a financial buffer, Wautier said.
“Start with a solid emergency fund [of] three to six months of living expenses in accessible saving,” he said.
Additionally, focus on consistent, long-term contributions rather than short-term gains in your investments.
“Staying informed — but not overwhelmed — by daily news, and consulting with a financial advisor can also provide clarity and reassurance,” he said.
Economic uncertainty is also a good time to assess the future of your employment, DeLorenzo urged. “White-collar jobs have seen reductions in real salaries, so you need to figure out a way to make up that difference. Cut discretionary spending or increase your income.”
Additionally, take a close look at your household budget and identify areas where inflation may hit hardest, such as groceries or electronics, Wautier said.
Wautier also recommended doing the following:
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Stock up on essentials
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Lock in longer-term service contracts
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Revisit discretionary spending to build flexibility
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Use credit mindfully and avoiding new high-interest purchases
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Explore investments that historically outperform during inflationary periods, like TIPS or commodities
Lastly, in preparation for long-term instability, “review and strengthen the foundation of your financial plan,” Wautier said. This includes reducing high-interest debt, increasing savings where possible and ensuring insurance coverage is current.
Don’t let fear and other emotions drive your financial plans. Be calm and thoughtful about your next steps.
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This article originally appeared on GOBankingRates.com: Trump’s Tariffs: 7 Things To Do Now If You’re Worried About the Unpredictable Stock Markets
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