As the U.S. and Israel-Iran war unfolds, markets are reacting, and many investors are asking what it means for their money.
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GOBankingRates spoke with Christopher Stroup, a financial planner and CEO of Silicon Beach Financial, about how disciplined rebalancing could work amid the conflict.
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Energy prices spiked while travel stocks and regional assets recently took a hit, per Reuters, as markets are bracing for the possibility of military strikes lasting at least a month or more.
That can raise a simple concern for investors: Is this the start of bigger losses? Stroup said volatility alone is not a reason to overhaul a portfolio. Instead, he looks at whether market moves have changed the balance of investments inside it.
“I don’t rebalance because of headlines,” he said. “I rebalance when allocations drift materially from targets, typically 5% or more, or when volatility meaningfully alters the portfolio’s risk profile.”
Stroup advised discipline, saying, “A geopolitical shock is noise; allocation drift is data. Discipline protects you from emotional overcorrection.”
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Geopolitical conflict often affects industries differently. Energy stocks, for example, can rally during periods of instability, while broader equities may pull back.
When one sector grows much faster than the rest, it can take up a larger share of a portfolio than planned. Stroup said the goal is not to chase momentum but to restore balance.
“If energy rallies and grows beyond its intended weight, we trim it back to target and redeploy into underweight areas, often broad equities or fixed income,” he said. “That forces you to systematically ‘sell high and buy lower’ without guessing the next move. Diversification only works if you maintain it.”
The result is a portfolio that stays balanced without turning into a geopolitical bet.
Bonds can also move during periods of conflict, especially as investors look for safer places to park money.
Stroup said the focus right now is balance. “We’re balancing stability and flexibility,” he said. “Short- to intermediate-duration bonds help manage inflation and rate risk, while still providing ballast during equity volatility.”
However, investors may want to be aware of the duration. “I’m cautious about extending the duration too aggressively. Bonds should dampen risk, not introduce a new one tied to interest rate speculation,” Stroup said.
For investors nearing retirement, market swings can carry more weight. A downturn matters more when withdrawals are approaching.
Stroup said volatility reinforces the need for a cash buffer and a clear withdrawal plan.
“For pre-retirees, volatility reinforces the importance of a 12-to-24-month cash buffer and a clear withdrawal strategy,” he said. “If markets pull back, we draw from cash or bonds rather than selling equities at depressed prices. Sequence risk matters more than headlines.”
Having short-term expenses covered can help protect long-term investments during periods of instability.
Markets may rise or fall during war, but reacting to headlines can do more harm than good. The goal is to stay disciplined and keep investments balanced over time.
Editor’s note: GOBankingRates is nonpartisan and strives to cover all aspects of the economy objectively and present balanced reports on politically focused finance stories. You can find more coverage of this topic on GOBankingRates.com.
This article is for informational purposes only and does not constitute financial advice. Investing involves risk, including the possible loss of principal. Always consider your individual circumstances and consult with a qualified financial advisor before making investment decisions.
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This article originally appeared on GOBankingRates.com: I’m a Financial Planner: Here’s How To Rebalance Your Investments Amid the Iran Conflict