By Ian Salisbury

With the stock market gyrating wildly and anxious headlines splashed across the news, many investors are wondering, "What should I do?" While the answer can vary slightly based on your circumstances, the basic gist doesn't: as little as possible.

It isn't an easy time to be an investor. A week ago, President Donald Trump took Wall Street by surprise with his aggressive plan for tariffs against more than 100 countries. The S&P 500 fell nearly 11% over the next two days.

On Wednesday, the White House appeared to relent, delaying tariffs against most nations -- although pointedly not China. The index immediately rallied 6%, although it remained well below its all-time high set less than a month ago.

Amid all this, no one on Wall Street seems to have any answers. Tariffs are complex, and experts can only offer guesses how they will affect the economy. Then, of course, no one can be sure what the president himself will do next.

Markets "are pricing in uncertainty at the macro level and at the micro level, at the actual company level -- and how it affects consumer sentiment, it's hard to tell," JPMorgan Chase CEO Jamie Dimon told Fox Business News Wednesday, before the latest White House about-face.

But if Wall Street is throwing up its hands, professional money managers still agree your best move as an individual investor is to simply wait it out. That doesn't necessarily mean you should do nothing at all. But it does mean, you need to avoid making any dramatic moves based on fear or feelings of uncertainty.

Here's a quick rundown of your best moves depending on your life stage -- whether you are young and still building wealth, or older and living off your savings.

What to Do if You're Investing for the Future

It's no fun logging into your account, only to see your balance shrink, sometimes by big amounts, each time you check. But if you have been investing in the stock market, chances are you won't need the money right away. If you are saving for retirement, you won't need it for decades.

Despite the jarring market action, your balance has plenty of time to recover. Sudden stock market sell-offs are more common than you might think, and they tend to blow over quickly.

Over the past 45 years the stock market's largest decline in each calendar year, averaged 14%, according to research by Dimensional Fund Advisors. Despite those drawdowns stocks ended the past 45 calendar years with a positive return 37 times.

During the Covid-19 pandemic, the stock market dripped 34% in just 23 days, wrote Dimensional founder David Booth in a post last week on the firm's website. "Yet within a year, the market had not only recovered, but also risen 78% from its lowest point. People who sold during the panic missed one of the strongest recoveries ever," he added.

If you can not only avoid selling, but continue to buy stocks you will put yourself in an even better position. After all, while the S&P 500 is down about 10% in 2025, that means the same securities are about 10% cheaper than they were a few months ago -- the investing equivalent to a department-store sale.

One way to force yourself to do this is to follow the strategy investing pros call " dollar-cost averaging." It means committing to investing small amounts month-in, month-out, no matter what markets are doing. The method can make buying stocks in a down market feel more routine and less momentous. The good news: If you have a 401(k) and are making regular paycheck contributions, you are doing this already.

What to Do if You Live Off Your Investments

If you are in retirement, and relying on your investments to pay your bills, the recent sell off may feel even scarier.

When you sell shares each month to fund your living expenses, a big drop in stock prices can deliver an immediate hit to your income. And the stakes are higher too. If you end up selling a bigger number of shares to raise the same amount of cash, you can put a dent in your nest egg that is difficult to recover from, even when stocks do rebound.

The upshot: You may want to tweak your portfolio to emphasize income-generating investments like dividend stocks, bonds and cash whose payouts can help you ride out market declines. Just be sure to sell as little as possible, since these less volatile investments will cap your upside once the market has clawed back all its losses.

How much investors ought to keep in volatile stocks, versus safer investments like bonds and cash, is one of the most basic issues financial planners wrestle with. Most urge clients to think of the problem less as an investing question and more as a budgeting question.

First, look at your expenses, then make sure you have enough income from sources like Social Security and cash-like investments to cover your outlays long enough to ride out a bear market. Such a "cash cushion" -- which typically amounts to one to two years of living expenses -- can give you the freedom to pick and choose when to sell stocks, helping you get the biggest bang for your buck.

"This money can be used as an alternative to fund living expenses if there is an extended down market," wrote Judith Ward, a financial planner and thought leadership director at asset manager T. Rowe Price last month. "You can draw from this account instead of having to sell investments at an inopportune time and locking in a loss."

Today's retirees enjoy one advantage they didn't the last time the stock market entered a similarly gut-wrenching period, during Covid. The Fed has spent the past several years raising interest rates to fight inflation. As a result, yield-oriented investments like bonds, money-market funds and certificates of deposit (CDs) are far more attractive than they were a few years ago, when short-term interest rates were close to zero.

Top retail money market funds yield about 4.4%, according to Crane Data, which tracks the industry. Top yields on one-year CDs, which allows savers to lock in current rates for the next 12 months, are more than 4.8%, according to DepositAccounts. The extra return should help you stretch your cash reserves that much further.

Write to Ian Salisbury at ian.salisbury@barrons.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

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April 10, 2025 11:55 ET (15:55 GMT)

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