The markets are down. Here's how to handle your investments

This story was originally published on Oct. 2, 2022, and has been updated.

Have you checked your retirement plan lately? Maybe don't. The markets have fallen lately.

Most recently, the S&P 500, a major index that tracks the performance of 500 of the largest companies in the U.S., dropped by 10% between February and March. That's known in stock market lingo as a "correction." The Nasdaq, another major stock market index, also hit correction territory in early March. There are reasons for these declines, including investor concerns about tariffs and fears of a recession.

At the same time, with the stock market, ups and downs are part of the deal. For example, the S&P 500 has seen ten other drops of this magnitude or more since the financial crisis in 2008 and 2009, according to data from the consulting firm Yardeni Research.

So how should you be handling your investments at the moment? Bola Sokunbi, founder and CEO of Clever Girl Finance, a personal finance education platform for women, talks to Life Kit about what to do — and how to manage the stress and anxiety around the changing markets.

Here are some takeaways from the conversation:

Don't pull your money out!

If you have money in a retirement plan or investment account and the markets have dropped significantly, that's actually the worst time to sell your stocks, says Sokunbi. A stock is an asset.

Today, it may be valued at less than what you paid for it. But "unless you actually sell it, you haven't lost anything," she says. "At this time, you want to ride out what's going on in the markets because economies are cyclical."

This Life Kit episode on investing has a helpful explanation on these cycles.

Take a break from logging into your accounts.

A lot of emotions can come up when you see your investment accounts plunge in value: fear, anxiety, regret and anger, says Sokunbi — so try not to check your investment accounts more than necessary.

"If you don't need the money anytime soon, then it's OK not to log into your account this week or this month or this quarter," she says.

Instead, turn your attention elsewhere. Read a good book. Spend time with your friends. Go for a walk (here's a handy Life Kit guide on how to enjoy nature).

Now is actually a good time to invest.

Although this may not be the right time to sell your stocks, it is a good time to buy shares, says Sokunbi. Because stock prices have dropped significantly, you can get more shares for less money.

"Essentially right now, the stock market is on sale," she explains. "And we all love a good sale."

But ... only invest if you can afford it.

Some questions to ask yourself before investing: do you have enough savings to cover your basic living expenses if you lose your job? Have you paid off your high-interest loans? Many credit cards charge interest rates of more than 20%, Sokunbi says. You should generally pay those off before investing your extra dollars.

An evergreen tip: Take advantage of your employer match.

Many companies offer employees a retirement plan match. If you invest, say, 5% of your salary, your company may contribute the same amount on your behalf.

The financial media website Investopedia has a guide to how these matches work. If you can, says Sokunbi, always invest at least enough to get the full match. Otherwise, you're turning down free money.

The audio portion of this episode was produced by Clare Marie Schneider. The digital story was edited by Malaka Gharib. We'd love to hear from you. Leave us a voicemail at 202-216-9823, or email us at LifeKit@npr.org.