Five essential strategies to protect your financial future in volatile times

When it comes to the market, my glass is usually more than half full. Past experience and history have made me a cautious market bear—the reality is, throughout history, the market has always gone up over time.

Growth of a Dollar, 1926–2023 (compounded monthly) from Dimensional Funds

Yet I find myself struggling to maintain that sunny disposition when surveying today's market landscape—primarily because of its utterly unpredictable nature. My proverbial glass is sloshing around on this roller coaster, making it look a lot less full.

Would you drink a glass of water on this ride?

Source: S&P Dow Jones Indices. As of March 4, 2025

But a true optimist always identifies the silver lining, and here's mine: if you haven't already prepared for these choppy waters, you still have time. The chaos of this presidency hasn't triggered an immediate market collapse—just severe volatility for now. This means you still have an opportunity to recalibrate your portfolio for this new, more turbulent era.

How should you prepare?

1. Ensure you have adequate cash reserves for any short-term emergency (and by cash, I mean the highest-yielding checking account available, which currently appears to be Capital One 360 Performance Savings).

   
   

2. Secure sufficient funds in FIXED, reliable income instruments to sustain you through a significant market downturn. I'm talking about a genuine crash—think 2008, but potentially deeper and longer-lasting. While typical market recessions last approximately 10-18 months, we should brace for something more severe. Why? The dismantling of the CFPB and the rollback of post-2008 regulations mean that whatever triggers the next recession could truly destabilize markets, with few safety nets in place to facilitate recovery. (Read my earlier article on the rollback of regulations here). We'll essentially be starting from Lehman Brothers' collapse day, from scratch.

   
   

   

   Source: Motley Fool

   
   

3. For funds you do invest in equities—money you absolutely will not need for at least 3 years—ensure proper diversification. Diversification acts as your portfolio's insurance policy, spreading risk across different asset classes that respond differently to market conditions, thus providing a buffer against concentrated losses in any single sector or investment type.

   
   

4. Continue working and saving—this remains the only factor truly within your control beyond strategic asset allocation. Regardless of market conditions, consistently adding to your savings creates a compounding effect over time and provides additional protection against market volatility.

   
   

5. Finally, prepare your “Personal Board of Directors” now. A personal board of directors is a trusted circle of advisors you deliberately assemble to provide honest feedback and support throughout your life journey. This group typically includes professionals like financial advisors, lawyers, CPAs, and doctors who offer specialized guidance in their respective fields. It also encompasses close friends, mentors, and role models who provide moral support, perspective, and inspiration when facing difficult decisions or challenges. With increasing regulatory rollbacks and economic uncertainty, cultivating this personal network provides a crucial safety net of protection and diverse knowledge. Your personal board serves as a reliable sounding board when important life decisions arise, offering wisdom and insights you might not develop on your own.

Why not just go all to cash?

This seemingly safe approach actually introduces its own significant risk—missing out on market recoveries. History has repeatedly shown that markets are unpredictable in their timing; some of the biggest single-day gains often occur immediately following major downturns. And, overwhelmingly, some bad days do NOT mean it will be a bad year:

Annual performance of the stock market (bars) and the largest intra-year decline (dots) of that year.

By maintaining some exposure to equities, you position yourself to benefit from these unexpected upswings. Remember that inflation continuously erodes the purchasing power of cash, and over long periods, properly diversified equity investments have consistently outperformed cash holdings.

The key is to harness time as your ally, allowing your investments to ride the inevitable waves of market fluctuations. This strategy works only when you've built those crucial cash buffers and fixed income reserves that prevent you from being forced to liquidate equities during downturns. Attempting to time the market—jumping in and out based on predictions or emotions—has been proven repeatedly to destroy wealth rather than create it.

While we cannot predict exactly when or how markets will shift, we can prepare ourselves to weather whatever storms may come. By taking these measured steps now, you position yourself to navigate through market turbulence with greater confidence and stability, allowing you to maintain focus on what truly matters in life and democracy.

“Keep Your Powder Dry” (1945) is a WWII-era drama that follows three women from vastly different backgrounds who join the Women's Army Corps. Serving as wartime propaganda, the movie aimed to boost civilian morale and promote women's participation in the war effort, with its title metaphorically representing their growth in readiness and responsibility. In financial contexts, "keep your powder dry" refers to maintaining significant cash reserves or liquid assets rather than being fully invested in the market. The expression advises investors to preserve their financial ammunition—cash—so they can capitalize on future investment opportunities that may arise during market downturns or volatility. Just as soldiers needed dry gunpowder to be combat-ready, prudent investors keep adequate liquidity to deploy when attractive buying opportunities present themselves, essentially counseling patience and strategic readiness rather than impulsive action.

Ms. Money is written by Marisa Rothstein, JD, CFP(t), AEP, and Lead Financial Advisor at Siena Private Wealth, A Member of Advisory Services Network, LLC.

Nothing contained in this article should be construed as investment, legal or tax advice. Consult your tax or legal advisor regarding your situation. To learn more about Siena Private Wealth, visit: www.sienaprivate.com. All information contained herein is derived from sources deemed to be reliable but cannot be guaranteed. All views/opinions expressed in this newsletter are solely those of the author and do not reflect the views/opinions held by Advisory Services Network, LLC.