Even as tariff-driven volatility sends markets violently in both directions for the next year or so, staying invested (and continuing to add to your portfolio) is the best course of action for young investors looking to build a sound nest egg over time. Of course, those who are eligible for a 401(k) match can really get a huge shot in the arm as they hit the gas pedal to a comfortable retirement.

Indeed, automating the investment process and not checking how the stock market’s faring can be a great hands-off way to benefit from the power of long-term compounding. Of course, if you don’t check in on your investments all too often and just automate contributions, you won’t be in a position to panic and sell out your investments after a sizeable decline.

Indeed, selling in the depths of a correction may very well cause you to miss out on a timely rebound. And while it’s impossible to tell for sure what the stock market will do next, I do believe that a man-made rebound can be the result of a man-made correction. Mad Money host Jim Cramer stated that the Trump correction was man-made, urging investors not to sell everything as stocks could have the potential to bounce as they did off the depths of April 8, 2025.

The case for staying invested and continuing to add to a $30,000 position

Undoubtedly, if Donald Trump can apply tariffs, raise or lower the bar, he can also eliminate them. Whether it takes a much better deal, a fair deal, or something that’s more akin to a Pyrrhic victory, I do think that throwing in the towel stocks after a correction after getting rocked is a move that’s not without its fair share of risks.

Indeed, if you miss out on one day, you could forego a year (or more) worth of gains. If you stay for the bad days, you may as well be around for the good ones that tend not to be all too far off. While it’s never a good idea to get too bullish after a short-term bear market rally (a dead cat’s bounce), I do think that playing the long game and trickling cash into stocks can be a wise move for many of today’s young people.

As investment firms lower their S&P 500 price targets after the fact, sometimes it’s best to keep doing what one has been doing: investing fixed amounts at fixed times and reinvesting the unspent dividends.

Is DRIP or auto-balance a better way to navigate stock volatility?

I don’t think you could go wrong by embracing either DRIP (dividend reinvestment plan) or auto-balance (dividends to cash for reinvestment into specific areas). A passive investor who wants a bit more of a hands-on approach may prefer the latter. However, if you’re one to get greedy and euphoric over tech when it’s red-hot and expensive while shying away from value plays, it may be best to stick with DRIP, at least in my humble opinion.

On the flip side, if an investor is committed to acting contrarian, auto-balance may yield better results. And, of course, there’s the option to incorporate a hybrid approach that involves DRIP and auto-balance. For new investors, I’d gravitate towards DRIP, especially since it’s easy for a beginning investor with limited investment knowledge to underperform the markets as they give their nest egg a more personal touch.

However, for seasoned investors who see themselves buying more stocks on dips (like the one we’re currently in), I think auto-balance takes the cake. Additionally, auto-balance will allow one to rebalance as new slates of risk fly into one’s radar.

Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.