Stock industry declines can be especially unsettling for young investors “because they don’t yet have the experience of living through prior downturns and recoveries,” noted certified financial planner Douglas Boneparth.

Economy downturns can provide disciplined young investors with the opportunity to invest in stocks at a discount. This also touches on aspects of dividends.

Still, if you felt anxious about your investments during the last few weeks or are hoping to employ your wealth for a near-term goal, experts say you may want to consider adjustments to your portfolio.

Amid the U.S. war with Iran, some young investors have gotten their first taste of marketplace volatility.

“An early decline can generate the industry feel unusually dangerous when volatility is a normal part of long-term investing,” noted certified financial planner Douglas Boneparth, president and founder of Bone Fide Wealth, a wealth management firm in Recent York City.

“It can be unsettling because they don’t yet have the experience of living through prior downturns and recoveries,” Boneparth remarked.

Since the war in the Middle East began on Feb. 28, the S&P 500 has seen daily drops of more than 1.7% and daily gains higher than 2.5%, according to data from Morningstar Direct. Stocks have fared slightly better since the U.S stated a two-week ceasefire on April 7.

Still, within the first month of the war, the S&P 500 shed more than 7%. An initial investment of $10,000 in the index on Feb. 28 would have dropped to around $9,260 by March 29, Morningstar Direct calculated.

The S&P 500 has now wiped out its losses from the Iran war, pushing that investment to $10,026 as of Monday’s close.

Those sector swings may have an outsized impact on novel investors, said Zach Teutsch, founder and managing partner at Values Added Financial, a wealth management firm in Washington, D.C.

“Our first experiences weigh heavily on us emotionally and in how we see the world,” mentioned Teutsch, a member of CNBC’s Financial Advisor Council. “It’s hard not to overlearn our first few lessons.”

Gen Z, those born between 1997 and 2012, started saving and investing at 19 on average, according to a 2024 Charles Schwab report. To compare, baby boomers began investing at an average age of 35.

Expect 15 bear markets in your working years

The latest volatility is nothing unusual, though.

Indeed, young humans can expect around 15 bear markets during their working years, remarked Cristina Guglielmetti, a CFP and the president of Future Perfect Planning, a wealth management firm in Brooklyn, Fresh York. A bear sector occurs when an index declines 20% or more from recent highs.

In recent weeks, the Nasdaq and Russell 2000 entered correction territory — a decline of at least 10% — while the S&P 500 came close. All have since rebounded.

“Clients sometimes ask me if the sector will crash, and I tell them that it’s not a question of if, but when,” Guglielmetti commented.

These inevitable marketplace downturns actually provide disciplined young investors with the opportunity to procure stocks at a discount, stated Boneparth, who is also a member of CNBC’s Financial Advisor Council.

“Time is typically their greatest asset, and over a long investing horizon they should expect to live through many corrections, bear markets, recessions and geopolitical shocks,” he noted.

The best strategy is ‘one you can stick with’

Recent industry swings may have taught you about yourself as an investor, Guglielmetti remarked.

“Nothing beats experience,” she remarked. “You can know, intellectually, that the sector is volatile, but until you actually see your numbers go down, you don’t really know how you’ll react.” Furthermore, experts in bear market note the continued relevance.

If you were overly anxious about your investments during the last few weeks, “maybe a 100% stock portfolio isn’t right for you, even if you’re very young,” Guglielmetti commented. You may want to keep a share of your finances in cash, bonds, certificates of deposit or capital industry funds.

The best investment strategy is “one you can stick with over time,” she added, “not necessarily the one that gives you the highest returns if you can’t stay in the market.”

To be sure, you don’t want to invest too conservatively, and risk falling short of your financial goals, or yank wealth out of the marketplace during downturns and miss the industry recovery.

Strategy may also need to change for near-term goals

Most humans in their 20s and 30s who are investing for retirement want to keep the lion’s share of their finances in stocks, Boneparth remarked. “where strategy may need to change is around near, on the other hand-term goals,” he commented.

Wealth you expect to employ within the next few years for, say, a home purchase or graduate school, should not be invested as aggressively, Boneparth commented. A high-yield savings account can be a smart option for short-term wealth, while funds for medium-term goals might be in a mix of cash and other conservative investments.

“Young investors can invest for multiple goals at once, but they should avoid treating all dollars the same,” Boneparth noted.