Volatility Is the Norm, Not the Exception
Market volatility is inevitable and should be considered whether it’s inflation concerns, geopolitical events, rate hikes, or tech selloffs. The S&P 500 has experienced an average intra-year decline of 14.2% despite finishing positive in 32 of the past 43 years.
But here’s the good news: volatility creates opportunity—especially for young investors.
The Power of Time: Why Young Investors Have the Edge
Time is the single greatest asset young investors possess.
Thanks to compounding, the earlier you invest, the more you benefit—even if the market dips.
Example:
If you invest $5,000 annually from age 25 to 35 (just 10 years and then stop investing) and earn 7% annually, you’ll have ~$602,000 by age 65. Even more if you consider dividends being reinvested.
If you wait until age 35 and invest the same amount every year until 65, you’ll only have ~$540,000. That’s the power of early investing, even through turbulence.
See our custom list of Portfolios at our partner site FinanciallyWise.AI.
How to Invest in a Volatile Market: Key Strategies
1. Dollar-Cost Averaging (DCA)
Investing consistently—regardless of market conditions—removes emotion and takes advantage of price dips.
Example: Investing $500/month in a volatile ETF like QQQ (Nasdaq 100) smooths out the impact of sudden drops and spikes.
2. Diversify Across Sectors & Geographies
Diversification cushions against sharp downturns in specific industries.
Suggested ETFs:
- VTI (Vanguard Total Market ETF): Broad exposure to the U.S. equity market.
- VEQT (Vanguard All-Equity ETF – Canadian-listed): Global exposure with ~40% U.S., 30% international, 30% Canada.
- XIT.TO (iShares S&P/TSX Capped Information Tech): Canadian tech exposure.
3. Use Low-Cost Index ETFs
Low fees mean more of your returns stay with you.
Over 30 years, a 1% fee can reduce returns by 25% or more.
Top Low-Cost Options:
4. Focus on Quality Stocks for Growth
In volatile markets, companies with strong balance sheets, consistent earnings, and competitive advantages tend to outperform.
Top Stock Picks (as of 2025):
- Apple (AAPL) – Cash-rich, growing services segment.
- Nvidia (NVDA) – AI leader, massive data center growth.
- Brookfield Asset Management (BAM.TO) – Canadian alternative asset manager, strong cash flows.
- Shopify (SHOP.TO) – Volatile but innovative, long-term e-commerce play.
Pro tip: Young investors can tolerate more volatility, so growth-oriented stocks make sense—just keep them as a smaller part of a diversified portfolio.
5. Build a Core-Satellite Portfolio
- Core (80%): Broad ETFs like VEQT or VFV for market returns.
- Satellite (20%): Growth stocks, thematic ETFs (like clean energy, AI, blockchain).
This gives you long-term stability with room for upside.
Should You Be Afraid of Market Crashes?
No—if anything, you should welcome them.
Here’s why:
The key takeaway? The market always recovers—but only if you stay invested.
This gives you the opportunity to buy your historically well performing securities for a lower price so you have a larger upside after it recovers.
Mindset Matters: Ignore the Noise
Trying to time the market rarely works.
A Fidelity study found that the best-performing accounts were often from investors who forgot they had one—because they didn’t sell in panic.
Instead, focus on:
- Long-term goals
- Consistent contributions
- Staying diversified
Final Checklist for Young Investors in a Volatile Market
✅ Start now, even small amounts
✅ Automate investing via DCA
✅ Diversify across asset classes & geographies
✅ Use low-cost ETFs
✅ Avoid emotional decisions
✅ Stay focused on the long game
Volatility may feel uncomfortable, but for young investors, it can be a golden opportunity.
By investing consistently, diversifying smartly, and avoiding emotional decisions, you’ll build long-term wealth while others hesitate on the sidelines.
See our custom list of Portfolios at our partner site FinanciallyWise.AI.
