How to Stay Calm in Volatile Markets: The Power of a Solid Wealth Plan

June 28, 2025

Market volatility is an inevitable part of investing. While the long-term trend of financial markets generally leans toward growth, the path is rarely linear. There are inevitable peaks and valleys—ups and downs that every investor will face. During market downturns, it’s natural to feel anxiety about the future of your portfolio. However, a strong wealth plan can serve as your guide through these turbulent times, helping you stay focused on your long-term goals and avoid making impulsive decisions that can harm your financial future.

The Role of a Wealth Planning During Market Volatility

It’s one thing to understand that markets will fluctuate, but it’s entirely different when you experience a sharp decline in your portfolio’s value. For many investors, moments like the 2020 COVID market crash—which saw the U.S. stock market plunge 34% in just 33 days—are terrifying and lead to panic-driven decisions. Selling investments at deep discounts to “protect” what’s left is a common response, but it can undermine years of careful planning.

A solid wealth plan acts as your anchor during such times. It keeps you grounded, allowing you to see past the immediate market noise and focus on your long-term financial objectives. Instead of responding to the latest headlines, a well-thought-out plan helps you stay on course and make informed decisions.

Case Study: How Wealth Plans Helped Investors Stay on Track During the 2020 Crash

Morgan Stanley Wealth Management conducted a study analyzing the impact of the 2020 COVID market crash on nearly 120,000 investors with a wealth plan. Despite the significant losses in the market, investors who adhered to their wealth plans were much more likely to stay on track with their financial goals.

At the peak of the market crash, 93% of these investors were still considered “on track” to meet their long-term financial goals. Even as their portfolios declined, over 75% of these “on-track” investors remained on track during the market’s low point. This data demonstrates the critical role wealth planning plays in maintaining composure during turbulent times.

In contrast, investors who were not on track prior to the crash—whether due to unrealistic goals or unexpected life events—saw a significant decline in their likelihood of achieving their objectives. The analysis found that those who had a “risky” or “at-risk” plan before the crash suffered a 33% decrease in the probability of meeting their goals.

The Power of Time and Small Adjustments

While market declines are unsettling, the good news is that recovery often happens more quickly than expected. In the case of the 2020 crash, the market rebounded by more than 16% by the end of the year. Those who stayed the course with their wealth plan were able to recover lost ground, demonstrating the importance of long-term thinking.

For those who were temporarily knocked off course, small adjustments could help get them back on track. Simple strategies, such as increasing your savings rate, delaying major financial decisions, or reducing discretionary spending, can make a significant difference. These steps allow you to regain momentum without making impulsive decisions that could harm your portfolio.

Practical Steps for Recovery

Here are some practical actions you can take to recover from market declines and maintain your financial goals:

• Increase Your Savings Rate: Adding just a small percentage to your savings can help rebuild your financial trajectory.
• Delay Major Purchases or Financial Decisions: Postponing a large expenditure or deferring a planned purchase can free up additional resources to stay on course.
• Reduce Spending Goals: Reassess your financial priorities. Often, even a slight reduction in lifestyle expectations can restore your financial footing.
• Extend Your Timeline: For those further from retirement, a few extra years of work can have a substantial impact on the long-term success of your plan.

These simple adjustments can help you navigate through market volatility and keep your wealth plan intact.

Building and Maintaining Your Wealth Plan

A wealth plan is not a static document—it should evolve as your life and goals do. Regular check-ins with a financial advisor, especially during periods of market turbulence, can help you assess whether your plan is still aligned with your objectives. A financial advisor can provide guidance on adjusting your plan as needed to ensure that you are on track, even when external factors like market volatility come into play.

Incorporating tools like Morgan Stanley’s Goals Planning System can give you a clearer picture of your goals and progress, and help you make decisions based on a well-thought-out strategy rather than market fear.

Final Thoughts: Stay the Course with Confidence

In times of market volatility, it’s essential to remember that investing is a long-term journey. The markets will experience highs and lows, but by staying committed to a solid wealth plan, you’ll be better equipped to weather those storms and stay on track toward your goals. By sticking to your plan, even during times of uncertainty, you can emerge stronger and more confident in your ability to achieve financial success.

With the right plan and guidance, you can turn volatile market conditions into an opportunity to stay focused on what truly matters: achieving your financial goals and building long-term wealth.

Disclaimer: Commercial banking services offered through First Western Trust Bank, Member FDIC 

Investment and Wealth Planning products and services are Not FDIC Insured, Not guaranteed by the Bank, May Lose Value

This content is for informational purposes only and does not constitute legal or tax advice. Please consult your legal or tax advisor for specific guidance tailored to your situation. First Western Trust Bank cannot provide tax advice. Please consult your tax advisor for guidance on how the information contained within may apply to your specific situation.