As we enter the final stretch of 2025, investors are navigating one of the most unpredictable environments in recent memory. Stock market volatility has surged, driven by heightened volatility surrounding the presidential election, fluctuations in interest rates influenced by the federal reserve, and geopolitical unrest. For those asking, how should I invest in this market with all the volatility elections and global risks, the answer lies in a disciplined approach grounded in long-term planning and strategic diversification.
At Towerpoint Wealth, a registered broker dealer, we believe that today’s turbulence presents both challenges and opportunities. Rather than react to daily market swings, we help our clients focus on the fundamentals, tailoring an investment strategy that reflects their financial goals, risk tolerance, and the risks involved in a volatile global landscape.
Understanding Market Volatility and the Current Stock Market Landscape in 2025
Volatility Is Back, and Likely Here to Stay
In 2025, market volatility is not a temporary phenomenon, it is a defining feature of today’s capital markets. The stock market has experienced frequent price fluctuations in response to interest rate speculation, shifting earnings projections, and election-related uncertainty. Many investors have grown cautious due to price swings that seem disconnected from market fundamentals, but volatility is not inherently negative. In fact, it can offer opportunities for those with a clear investment strategy and a long-term perspective.
The Election Year’s Impact on Investor Confidence
Every election cycle introduces a new layer of political uncertainty. The 2025 presidential election is particularly impactful due to diverging fiscal and regulatory agendas that could have a significant impact on corporate taxes, interest rates, and market performance. While election results can influence certain sectors in the short term, history shows that stock prices typically recover from election-related dips, especially when investors remain focused on the broader business cycle.
Global Risks and Their Influence on Markets
Beyond U.S. borders, global markets continue to face pressure from geopolitical conflicts, trade policy shifts, and regional economic slowdowns. International markets are reacting to developments in energy supply chains and ongoing instability in emerging markets. These global pressures contribute to overall price volatility, creating a complex backdrop for investors who seek stability. However, international equities and global diversification can help offset market decline in U.S.-centric portfolios.
What NOT to Do: Common Investor Mistakes in Uncertain Times
Avoid Panic Selling and Moving Entirely to Cash
During periods of heightened volatility, some investors may consider liquidating their portfolios to avoid potential significant losses. But attempting to time the stock market by moving to cash positions can result in missing key days of recovery and growth. Past performance has shown that even a few missed days in the equity market can significantly reduce overall portfolio performance.
Don’t Chase Trends in a Particular Industry
With news cycles focused on trending technologies or political changes, many investors tend to chase performance in a specific investment product or particular industry. However, investing heavily in a single sector can increase risk without any guarantee of improved future results.
Ignoring the Tax and Planning Implications
Investors often forget the tax ramifications of selling assets during periods of volatility. Realizing capital gains at the wrong time, or without proper planning, can lead to unexpected tax burdens. Coordination between investment moves and tax strategy is essential for long-term wealth preservation.
The Smart Investor’s Playbook: Key Principles for 2025 and Beyond
Stick to a Long-Term Financial Plan
A strong financial plan provides the foundation for making rational investment decisions. When market prices fluctuate or the equity market dips, a clear plan reminds you of your financial goals, time horizon, and risk profile. Staying invested through uncertain conditions has historically led to better outcomes than reactive shifts.
Diversify Across Asset Classes to Manage Volatility
In today’s environment, successful investing means allocating across a wide range of asset classes. These may include:
- U.S. large-cap and small-cap equities
- International equities and emerging markets
- Fixed income securities such as municipal bonds and treasury bonds, whose bond prices may fluctuate but often provide a buffer against volatility
- Real estate and infrastructure
- Alternatives such as private equity or hedge funds (where appropriate)
This approach helps mitigate the impact of stock market volatility and creates exposure to opportunities across global markets.
Be Tactical but Avoid Market Timing
While it’s important to maintain a long-term allocation, some tactical shifts can improve portfolio performance. These adjustments might include rotating between sectors based on economic conditions, adjusting exposure to the bond market in anticipation of lowering interest rates by the federal reserve, or increasing holdings in defensive asset classes. However, these moves should be made with care and in alignment with your overall plan.
Portfolio Strategies for Different Investor Profiles
Retirees Seeking Stability and Income
Retirees are especially sensitive to market volatility, as portfolio drawdowns can impact their ability to generate income. A sound strategy for this group includes:
- Allocating to high-quality fixed income and treasury bills
- Dividend-paying equity securities with consistent earnings growth
- Maintaining a short-term liquidity buffer to cover 12–24 months of expenses
- Minimizing realized capital gains through tax-efficient withdrawals
This allocation protects principal while generating consistent cash flow, helping retirees maintain their lifestyle regardless of market movements.
Business Owners Seeking Flexibility and Growth
Business owners benefit from flexible portfolios that adapt to capital needs or liquidity events. A strategy for this group might involve:
- Moderate equity exposure across U.S. and international markets
- Use of alternatives or private investments that are less correlated to the broader market
- Maintaining liquidity for business opportunities or economic downturns
- Coordinating portfolio strategy with exit planning and business valuation
High-Net-Worth Families Focused on Legacy
For families looking to transfer wealth across generations, the goal is balancing growth with risk management and estate planning. Key components include:
- A globally diversified asset allocation focused on long-term appreciation
- Integration of gifting strategies, trusts, and insurance products
- Philanthropic planning through donor-advised funds
- Minimizing tax drag from capital gains or income-producing investments
How to Adjust Without Overreacting
Rebalancing to Maintain Strategic Allocation
Price volatility causes portfolios to drift from their target allocations. Regular rebalancing helps control risk and return by trimming outperformers and adding to undervalued areas.
Understand Your Risk Capacity
While risk tolerance measures your emotional ability to handle loss, risk capacity reflects your financial ability to withstand it. A properly structured portfolio considers both. If your time horizon is long, and your financial needs are limited in the near term, you may be able to take advantage of market decline by buying stocks at lower prices.
Use Shock Absorbers in Your Portfolio
Assets like treasury bills, gold, and inflation-protected bonds can act as buffers during periods of heightened uncertainty. For clients with lower risk tolerance, these holdings may provide essential protection against severe market downturns.
How a Fiduciary Advisor Adds Value in Volatile Markets
Behavioral Guidance and Support
One of the most valuable services a fiduciary provides is helping clients avoid emotionally driven mistakes. This includes coaching clients through market volatility and reinforcing the importance of discipline during turbulent times.
Tax-Aware Portfolio Management
A qualified investment adviser helps you manage tax exposure by harvesting losses, deferring gains, and making sure any portfolio changes are tax efficient. Timing your investment decision to coincide with tax planning can significantly enhance overall portfolio performance.
Coordination with Broader Wealth Planning
Investments are just one part of a larger picture. At Towerpoint Wealth, we integrate wealth management services such as retirement planning, estate strategy, insurance, and philanthropy into every client relationship to ensure your entire financial life is working in sync.
FAQs: Investing During Volatility and Political Uncertainty
Should I sell before the presidential election?
Reacting to an election cycle by selling is rarely in your best interests. Historically, the stock market has rebounded after election results, regardless of party, as long as economic conditions remain stable.
Is now a good time to move to cash?
Unless your investment objectives have changed, large shifts to cash may do more harm than good. Staying allocated according to your risk tolerance helps you stay on track toward your financial goals.
What assets perform well during political uncertainty?
Defensive equities, quality bonds, treasury bonds, and international investing strategies can offer stability during periods of political uncertainty and increased volatility.
How does Towerpoint Wealth support clients in volatile markets?
We provide proactive guidance, active portfolio oversight, and comprehensive financial planning tailored to each client’s situation. Our role is to help you stay focused, make informed decisions, and move forward with confidence, even when the market doesn’t. We also consider events specific to each client’s circumstances and other factors that may influence investment decisions.
Final Thoughts: Invest with Clarity and Confidence
With the presidential election, global instability, and fluctuating interest rates dominating the headlines, many investors are understandably concerned. But the key question remains: how should I invest in this market with all the volatility elections and global risks?
The answer lies not in fear or speculation, but in a disciplined, customized approach. At Towerpoint Wealth, we guide our clients through uncertainty with a strategic framework that emphasizes diversification, planning, and resilience. While stock prices may shift and political developments remain unpredictable, your financial goals do not. Please note that all investment strategies and market conditions are subject to change, and forward looking statements are inherently uncertain.
