April 14, 2025

Navigating Financial Planning in a Volatile Market

When markets become volatile, it’s natural to feel uneasy about your financial future. Watching account values swing up and down can make even the most seasoned investors question their strategy. But the truth is, periods of volatility are not only expected, they're also normal. And with the right planning, they can present valuable opportunities.

At Allworth Financial, our approach is rooted in helping you make thoughtful, long-term decisions that align with your goals, not just reacting to the headlines of the day. In fact, some of the best long-term financial moves can be made because of market volatility, not in spite of it.

Here are some key ways to use turbulent markets to your advantage, along with best practices that can strengthen your financial plan in any environment.

1. Roth Conversions: Turn Market Dips into Tax Strategy Wins

A downturn in the market can be a prime time to consider converting part of a traditional IRA to a Roth IRA. When your investments temporarily lose value, you can convert more shares for the same tax cost. That means future growth and withdrawals in retirement could be tax-free, and the potential upside is even greater when the market rebounds.

It’s also an opportunity to take advantage of potentially lower income years. If your income has dipped or you’re not yet drawing Social Security, your tax bracket might be more favorable now than in the future.

Best Practice: Work with a financial advisor and a tax professional to run a Roth conversion analysis. This helps you evaluate whether the long-term tax benefits outweigh the short-term tax cost.

2. Tax-Loss Harvesting: Make Lemonade from Market Lemons

If you have investments in taxable accounts that are down in value, you might consider tax-loss harvesting. This strategy involves selling investments that have declined in order to offset gains elsewhere in your portfolio or even reduce your ordinary income (up to $3,000 per year in capital losses can offset income).

Importantly, harvested losses can be carried forward to future years. This gives you a tax asset you can use over time.

Best Practice: Be sure to avoid the IRS’s wash-sale rule, which disallows the deduction if you repurchase the same or substantially identical investment within 30 days. Your advisor can help find suitable replacements to keep your investment strategy on track.

3. Rebalancing: Keep Your Portfolio Aligned with Your Plan

Over time, market swings can knock your investment mix out of alignment with your risk tolerance and goals. For example, if stocks have fallen significantly, your portfolio may now be more heavily weighted toward bonds than intended.

Rebalancing brings your portfolio back to its original target mix, and it’s a disciplined way to “buy low” and “sell high” without trying to time the market.

Best Practice: Regularly review your asset allocation. Rebalancing doesn’t have to happen every month, but checking in a few times a year, or when market swings are significant, is a healthy habit.

4. Review Your Financial Plan: Realign Based on Life, Not Just Markets

When the market shifts, your goals often don’t. Retirement timelines, income needs, estate planning priorities, these remain fairly consistent. That’s why now is a great time to revisit your plan, stress test it against recent market changes, and see how it holds up.

In many cases, you’ll find that your plan still works. And if adjustments are needed, such as modifying your withdrawal strategy or prioritizing certain goals, we’ll guide you through those decisions with clarity and confidence.

Best Practice: Don’t let volatility derail a long-term plan that was designed with ups and downs in mind. Instead, use this as a moment to refine, not abandon, your strategy.

5. Revisit Risk and Cash Flow Needs

Market uncertainty can reveal how comfortable (or uncomfortable) you really are with investment risk. If you’ve found yourself losing sleep over account fluctuations, it might be time to revisit your risk tolerance and cash flow needs.

Having enough cash on hand for short-term spending needs (usually 6–12 months) allows you to leave your long-term investments alone and ride out volatility without panic.

Best Practice: Align your investments with both your goals and your temperament. That way, you’re more likely to stay the course through market ups and downs.

6. Consider Opportunities, Not Just Worries

Periods of volatility often lead to innovation and opportunity. New investments, better interest rates on savings, and fresh chances to revisit your priorities may all emerge during times of change.

That’s why staying engaged with your advisor, especially now, is one of the best things you can do.

Best Practice: Let your advisor know if your goals, income, or risk preferences have changed. They can help identify opportunities you might not have considered and keep your financial plan working for you.

You’re Not in This Alone

At Allworth, we believe that planning is what transforms uncertainty into clarity. It helps you move forward with purpose, even when the markets don’t cooperate.

So if recent volatility has you feeling uncertain, know this: now may be exactly the right time to check in with your advisor, explore proactive strategies, and ensure your financial plan is built for the long run.

You’ve worked hard to build your wealth. Let’s make sure it continues to work hard for you.

Ready for a plan checkup?

Reach out to your Allworth advisor today. We’re here to help, no matter what the markets are doing.

This information is meant for educational purposes and not as direct tax or legal advice. Rules and regulations can shift anytime, so it’s always best to consult a qualified tax advisor, CPA, or attorney for guidance tailored to your specific situation.

All data are from Bloomberg unless otherwise noted. Past performance does not guarantee future results. Investments involve risks, including market, credit, interest rate, and political risks. For more information, please refer to Allworth Financial’s Form ADV Part 2.

Past performance may not be indicative of future results. Asset allocation does not ensure profits or guarantee against losses; it is a method used to manage risk. Different types of investments involve varying degrees of risk. Therefore, it should not be assumed that future performance of any specific investment, investment allocation, or investment strategy (including the investments and/or investment strategies recommended and/or undertaken by Allworth Financial), will be profitable, equal any historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Advisory services offered through Allworth Financial, an S.E.C. registered investment advisor. A copy of our current written disclosure statement discussing our advisory services and fees is available upon request. Allworth Financial is an Investment Advisor registered with the Securities and Exchange Commission. Securities offered through AW Securities, a Registered Broker/Dealer, member FINRA/SIPC.