Opportunities for Financial Planning During Market Volatility  

Market ups and downs are a normal part of the investing experience, but that doesn’t make them any less unsettling. A market correction, often defined as a short-term drop of 10% or more in a major index, can prompt concern for investors at any stage. 

These periods of uncertainty can also serve as a valuable reminder to step back and reflect. Financial planning during market volatility is not about making quick decisions. Instead, it’s about revisiting key parts of your strategy to see if they still align with your goals, your needs, and your comfort with risk. 

Rather than viewing a correction as a setback, it can be an opportunity to check in and adjust your approach with greater clarity and intention. 

Reassessing Your Financial Plan 

When markets become unpredictable, it’s natural to feel uncertain. But it can also be a productive time to revisit your financial plan and consider whether it still reflects your current circumstances and long-term direction. 

Start by asking a few core questions: 

• Are my goals still the same? Major life events, shifting family dynamics, or changes in employment or health can all influence your financial priorities. What made sense a year or two ago may no longer apply in the same way. 

• Has my comfort with risk changed? Market downturns often bring emotional responses. If recent volatility has made you uncomfortable, it may be time to revisit whether your investments still match your ability and willingness to take on risk. 

• Are my cash flow needs being met? For those in or approaching retirement, reviewing your income sources and spending needs is essential. A correction can affect not only investments, but also how you access funds to meet ongoing expenses. 

Taking time to reflect doesn’t mean overhauling your entire plan. Often, it’s about confirming what’s still working and identifying small areas that may need adjusting. Using a simple checklist can help bring structure to this review so that nothing important gets overlooked. 

Investment Strategy and Rebalancing 

When markets fluctuate, your portfolio may shift in ways that aren’t immediately obvious. Over time, changes in the value of different assets can cause your original investment mix to drift. For example, if stocks decline sharply while bonds remain relatively stable, you might find that your portfolio has become more conservative than you intended. 

This is where the idea of rebalancing comes in. Rebalancing is the process of reviewing your asset allocation and deciding whether to bring it back in line with your original targets. It’s not about trying to predict what the market will do next. Rather, it’s a way to maintain consistency with the investment strategy you’ve already set for yourself. 

Some people choose to revisit their allocation during periods of market stress because it can offer a clearer picture of how their portfolio has shifted. It also creates an opportunity to confirm whether their current mix still reflects their time horizon, comfort with risk, and overall financial goals. 

Even if no changes are made, the process of reviewing your investment strategy during a correction can help you stay grounded and focused on the bigger picture. 

Tax Planning Considerations 

Market corrections can open the door for revisiting certain tax planning strategies—not as a reaction to short-term performance, but as part of a broader review of how your financial picture fits together. Two strategies that often come up during market downturns are Roth conversions and tax-loss harvesting. 

A Roth conversion involves moving funds from a traditional IRA into a Roth IRA. Since traditional IRAs are typically funded with pre-tax dollars, any amount converted is subject to income tax in the year of the conversion. When account values are temporarily lower due to market declines, some people explore whether this is a more favorable time to convert. The potential benefit is paying taxes on a smaller balance, though the actual outcome depends on individual income, tax brackets, and long-term goals. Timing, tax consequences, and expected future income all factor into whether this strategy fits within someone’s plan. 

Tax-loss harvesting is another concept that becomes more relevant when the market drops. It involves selling investments that are currently below their purchase price to realize a capital loss. These losses can then be used to offset capital gains elsewhere in the portfolio, or in some cases, offset a portion of ordinary income. This strategy isn’t about locking in losses as much as it is about using them intentionally within the context of a larger tax picture. The IRS has specific rules about buying back the same investments within a certain period (known as the wash-sale rule), so this approach requires careful planning. 

It’s important to recognize that both strategies carry trade-offs and are not one-size-fits-all. What makes sense in one year—or for one household—might not in another. Still, reviewing potential tax considerations during periods of volatility can be part of a thoughtful, longer-term planning process. 

Liquidity and Emergency Reserves 

Market corrections can be a good time to revisit how much cash you have readily available for short-term needs. When markets are down, having access to liquid funds can reduce the likelihood of needing to sell long-term investments during unfavorable conditions. 

Liquidity refers to money that’s easily accessible without penalties or potential losses due to market timing. This might include funds in savings accounts, money market accounts, or short-term certificates of deposit. These resources can be used to cover unexpected expenses, planned purchases, or temporary income gaps, without disrupting your investment strategy. 

Rechecking your emergency reserve during a market downturn can also be worthwhile. Financial professionals often suggest setting aside enough to cover several months of essential expenses, but the right amount varies depending on lifestyle, job security, and other sources of income. Even if your current reserve isn’t where you’d ultimately like it to be, having a clear picture of what’s available can help with decision-making during uncertain periods. 

Maintaining liquidity can offer peace of mind and more flexibility when markets are unpredictable. A market correction may serve as a helpful reminder to assess whether your short-term savings still align with your needs. 

Legacy, Gifting, and Estate Planning 

Market corrections can also prompt reflection on long-term legacy goals. When asset values decline, some individuals choose to revisit their gifting or estate planning strategies to see if current conditions might create planning opportunities. 

For example, strategic gifting—such as transferring appreciated assets to family members or charitable entities—can be more effective when those assets are temporarily lower in value. In certain cases, gifting during a downturn may allow for a greater number of shares or units to be transferred within annual gift limits. If those assets later recover in value, the appreciation may occur outside the donor’s taxable estate. Of course, this depends on the asset, the timing, and the broader estate plan. 

Estate planning more broadly can also benefit from periodic review. A change in market conditions may affect how assets are distributed, how liquidity needs are addressed, or whether current documents still reflect your goals. Trusts, beneficiary designations, and charitable giving vehicles like donor-advised funds may all play a role, and these tools can function differently depending on market performance and timing. 

Even if no changes are made right away, taking time during a market correction to revisit your legacy goals and estate structure can support more informed decisions down the road. 

Turning Uncertainty into Intention 

Volatility often brings uncertainty, but it can also create space for reflection. While it’s impossible to predict what markets will do next, that doesn’t mean planning loses its value. In fact, periods of change can highlight the importance of being intentional, especially when the path forward feels unclear. 

Financial planning isn’t about having all the answers or making perfect decisions in real time. It’s about staying grounded in your goals and values, even when the landscape shifts. A market correction may not call for immediate action, but it can serve as a useful reminder to pause, ask thoughtful questions, and revisit areas of your plan that may deserve a second look. 

This kind of review doesn’t need to be complicated. Often, it starts with simply checking in on your cash flow, your investments, your comfort with risk, and your longer-term priorities. Building that habit of intentional review, especially during times of volatility, can help you move forward with more focus and clarity, even when conditions are less predictable. 

Final Thoughts 

Market corrections can be uncomfortable, but they also offer a chance to pause and reflect on where your financial plan stands. Whether you’re reviewing your investment mix, reassessing cash flow, or revisiting estate and tax strategies, these moments can help bring clarity to how your plan is working in today’s environment. 

If you’re unsure where to begin, our Market Correction Checklist is a simple tool designed to help guide your review. It outlines common areas people choose to revisit during periods of market change and can serve as a helpful starting point for reflection. 

And if you’d like to explore any of these topics in more detail, connecting with a financial professional may provide additional perspective based on your goals and circumstances. 

Standard Disclosure 

This blog expresses the author’s views as of the date indicated, are subject to change without notice, and may not be updated.  The information contained within is believed to be from reliable sources.  However, its accurateness, completeness, and the opinions based thereon by the author are not guaranteed – no responsibility is assumed for omissions or errors.  This blog aims to expose you to ideas and financial vehicles that may help you work towards your financial goals. No promises or guarantees are made that you will accomplish such goals.  

Past performance is no guarantee of future results, and any expected returns or hypothetical projections may not reflect actual future performance or outcomes. All investments involve risk and may lose money. Nothing in this document should be construed as investment, tax, financial, accounting, or legal advice. Each prospective investor must evaluate and investigate any investments considered or any investment strategies or recommendations described herein (including the risks and merits thereof), seek professional advice for their particular circumstances, and inform themselves about the tax or other consequences of any investments or services considered.   

Investment advisory services are offered through Liberty Wealth Management, LLC (“LWM”), DBA Liberty Group, an SEC-registered investment adviser.  For additional information on LWM or its investment professionals, please visit www.adviserinfo.sec.gov  or contact us directly at 411 30^th Street, 2^nd Floor, Oakland, CA  94609, T: 510-658-1880, F: 510-658-1886,  www.libertygroupllc.com. Registration with the U.S. Securities and Exchange Commission or any state securities authority does not imply a certain level of skill or training. 

References 

Adams, Hayden. (March 28, 2024). Watch Out for Wash Sales. Charles Schwab. https://www.schwab.com/learn/story/primer-on-wash-sales 

Riepe, Mark. (March 14, 2025). Market Correction: What Does It Mean? Charles Schwab. https://www.schwab.com/learn/story/market-correction-what-does-it-mean 

Vanguard. (n.d.). Maximize Your Tax Savings with Tax-Loss Harvesting. https://investor.vanguard.com/investor-resources-education/taxes/offset-gains-loss-harvesting