“The long-term stability of the 60/40 portfolio in the United States has been noteworthy, mainly because of the market’s strong resilience and recovery after significant downturns,” the authors wrote.

Beware of cashing out

If you’re ever tempted to cash out of equities when stocks are going haywire, know that such a move can be risky for two reasons.

First, selling when stocks are low locks in your losses. Since timing the market is impossible, you may re-enter after a recovery begins, potentially repurchasing what you used to own at a higher price.

Second, you may get too comfortable keeping the cash. Not only will it not grow nearly as much as equities in the long run, but you risk losing spending power if inflation increases, which is expected to happen under Trump’s tariffs.

Even if you can get a nominal rate of return that matches or outpaces inflation – say on a certificate of deposit – the tax you owe on the interest may erase that advantage.

“What is cash doing for you? Is there inflation? Absolutely. So what is your after-tax rate of return?” said CFP Frank Wong, a principal at W Wealth Strategies.

Take advantage of buying opportunities

Big stock declines can provide long-term buying opportunities. “If you went to the supermarket (last month) and tuna was $3 for two cans and now it’s $3 for 4 cans, what do you do? You buy more cans,” Wong said.

But that doesn’t mean you should do so indiscriminately when buying into stock indexes. “Wade in, don’t dive,” Kearns advised, noting that before the latest rout, stocks have been overvalued relative to the risk investors took to own them. Target-date funds in your 401(k) – which invest with an eye toward the year you are likely to retire – should do this kind of risk management for you.

Know when you’ll need your money

Most people under 50 have a long time before retirement, allowing them to invest more heavily in stocks. However, many people over 50 also have a long horizon during which to invest — potentially 15 to 30 years. That is because the majority of their savings will remain invested throughout much of their retirement, as they typically withdraw only small amounts annually to supplement income from Social Security and any pensions.

That said, for money you will need within the next five years, be very conservative, Wong advised. “Whatever you have now, I’d hold.” Ideally, you’d keep that money in short-term fixed income and high-yield savings so that it earns at least enough to keep pace with inflation.

Raise cash to cover one to two years of living expenses in retirement

Retirees and those within a few years of retirement should avoid selling any of their stock holdings when the market is down. Instead, you will want to have up to two years of cash to cover your living expenses on top of any fixed income payments you’ll get.

If you have to tap your current portfolio to raise that cash right now, “pull from assets that haven’t fallen a lot during this period – for example, high-quality bonds,” said Christine Benz, director of personal finance and retirement planning at Morningstar.

If you’re still working, she said, try to boost your savings. If you’re over 50, you’re entitled to make catch-up contributions in your 401(k). And those catch-up contribution limits are even higher if you’re in your early 60s.

Lastly, do a “budget audit” to see where you can reduce your spending, Benz recommends.

“In addition to boosting savings and building out your cash buckets, that strategy has an emotional ‘take control’ benefit. Having a tighter budget will help reduce portfolio withdrawals once retirement commences,” Benz said.

For retirees who are no longer saving, she also advises trying to adjust spending during market downturns. “That will leave more of their portfolios in place to recover when the market eventually does,” she noted.

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