Worried about a shaky stock market? This is what financial advisers suggest you do

Since the U.S. and Israel began strikes against Iran, oil prices have gone up. Stock markets have gone in the opposite direction, driven by uncertainty about the war's future and its effect on the economy.

The Dow Jones Industrial Average is down around 9% since its February high, which it hit about two weeks before the war began. That's far from a crash or being considered a bear market, which typically describes a market that's fallen 20% from recent highs. But the market decline has pulled down the value of Americans' investments funds, from college to retirement plans.

What should you do if that makes you feel as jittery as the markets? Financial advisers say it depends on when you need to tap into your funds.

A decade or more from needing to withdraw: Hands off

For most people, who are say 10 years or more away from needing those funds, the advice is simple: Leave your accounts alone.

Markets have proven resilient to recent global disruptions, at times bouncing back within a few years and sometimes within just months. U.S. stocks are up from where they were before the Covid pandemic, Russia's invasion of Ukraine and the launch of the "Liberation Day" tariffs.

"You really don't want to shoot yourself in the foot having a rash reaction, or an immediate emotional reaction, to stock prices going down 4 or 5% in a week and a half," says Steven Elwell, chief investment officer and co-owner of Level Financial Advisors.

That's not to say a long period with a weak stock market is impossible. But for American investors who don't plan to withdraw for decades, financial advisers see the current dip as an opportunity to buy stocks at a discount.

However, Elwell does warn that markets could get worse before improving, which means it can take some steely nerves to keep buying.

"It's very easy to say 'Buy low and sell high,' but when the moment to buy low shows up, it means something scary is going on," Elwell said.

Within a few years of retirement: Rebalance toward safer options

If you're still a few years away from retirement or needing to tap into college funds, financial advisers say the current bumpy market will likely be in the rearview mirror when you're ready to access your accounts.

But it's time to prepare for the next geopolitical event that could rattle the market right when you need the cash.

One of the best ways to be ready is through diversification. It's classic advice to have a spread of holdings from the start, but when you are younger, those can be weighted toward the highly-rewarding but fickle stock market. As withdrawal time approaches, it helps to shift some holdings into more stable assets, like U.S. Treasury bonds.

Many retirement funds do this automatically. They're called target date funds because they are designed for people planning on a particular retirement year. As you get closer to that gold watch, the fund shifts some of your holdings from stocks to bonds.

That's also true for many college investment accounts like 529 plans, which are targeted towards a certain high school graduation year. More than 80% of 529 plans do this, according to investment and research firm Morningstar.

Another way to diversify is to make sure you're invested not only in U.S. stocks and bonds, but also in international funds. Not only does this spread out risk, but it lets you in on international markets when they're booming — and sometimes they're booming when U.S. stocks aren't.

In general, international funds outperformed the S&P 500 last year, in some cases by nearly 50%. But this year, since the Iran war began, some of those overseas funds are performing worse than those in the U.S.

Advisers say that for investors in the long game, it can be a good time to get a slice of the world market at a discount. "The past year-and-a-half is a good reminder of the benefits of diversifying internationally," says Michael Budzinski, a portfolio manager at Morningstar.

Need the money now: Be as rational as Spock

But what if you need your funds now, and haven't already made these preparations?

It can be scary to have to sell stocks in a shaky market, when you won't be getting top dollar for them. But there are still some options to mitigate the damage, according to Kevin Khang, head of Vanguard's global economic research team.

For example, if you have more than one fund or account, draw from the one that's doing the best — or at least not doing as poorly as the others. You are still selling at a loss, but not by as much.

Don't touch the worst-performing funds, because withdrawing from them essentially locks in the larger loss. "Then you are not giving that holding [time] to grow back when the conflict fades into the memory and volatility comes down," Khang said.

And overall, try to withdraw only what you need. Leave as much of your investment untouched as you can so it has a chance to recover when the market does.

Christopher Holtby, the co-founder of Wealth Advisors Trust Company, says to think like Star Trek's ultra-logical Spock. " Mr. Spock would be telling you to do things that are extremely rational and might be painful: either to cut your expenses, delay your retirement," Holtby says. "Because what he's also thinking is you don't want to be selling when everyone else is selling."