Advisors to investors: Just continue to remain calm

Just a few days into 2016, market volatility is already testing investors' resolve.

North Korea's claim to have successfully tested a hydrogen bomb, in combination with continued worries over China and a slowing global economy, contributed to a triple-digit stock decline Wednesday morning. That follows markets' worst opening day in eight years Monday, after weak manufacturing data routed Chinese stocks overnight.

But financial advisors suggest investors make a belated New Year's resolution: Stay the course.

"Investor discipline is being highly tested," said Karin Stifler, a certified financial planner with Walden Wealth Partners in Solon, Ohio. "What really is important right now is to stay disciplined beyond the news of today and look to the long-term."

The new year's volatility shouldn't be particularly shocking.

A rocky 2015 gave investors plenty of opportunity to stress-test their strategies and adjust as necessary. Think of this as just another opportunity to fine-tune and plan ahead, said Andrea Blackwelder, a certified financial planner with Wisdom Wealth Strategies in Denver.

"If you're making short-term decisions with long-term money, it's time to reassess your strategy," she said.

Don't read too much into that bad first trading day, either. "I don't know that it necessarily changes anything," said Blackwelder. "Ask yourself, 'Would you do the same if it was the third of June?' It's just another day." Analysis from The Big Crunch found that five of the seven years since 1978 that had similarly inauspicious opening days still ended positive for the year.

Pulling money out of the market is likely to be an expensive mistake, said Dorothy Bossung, a certified financial planner with Lowery Asset Consulting in Chicago.

"Getting back in is one of the toughest decisions in the world," she said. Investors have a horrible track record of timing the market: A 2015 analysis from investment-planning firm SigFig found that the more that people sold during the August 2015 market correction, the worse their investments performed. Investors who did nothing had median 12-month returns of -2.8 percent, while those who sold more than 30 percent returned -4.9 percent over the same period.

Plus, in the short term, low savings rates mean your money won't be working for you.

"You're really not getting paid anywhere else," Bossung said. "It doesn't make CDs or savings accounts or anything like that an appealing choice."

One area where investors should reassess, however, is short-term goals. If you need cash this year for, say, tuition payments or a home down payment, those funds shouldn't be in the market.

"You can't afford the risk," said Stifler. But even then, consider the tax and market implications before reallocating or moving funds, she said.

"With our clients, what we've been telling them to do is rebalance for targets," said Bossung. Doing so can help you stay on track with the right mix for your goals after year-end tax-loss harvesting — and help you better weather the inevitable next bout of volatility.

This story originally ran Jan. 4, 2016. It has been updated to reflect the market response of North Korea's claim of a successful hydrogen bomb test.