4 Moves Savvy Investors Are Making Amid Market Volatility and Tariff Rollouts

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Ever since President Donald Trump announced his plans for a tariff rollout, the markets have experienced extreme volatility. If you’ve seen your own portfolio take a hit, you may be wondering the best course of action to take.

“At Wealthfront, we believe that staying the course is one of the most powerful things an investor can do,” said Alex Michalka, vice president of research at Wealthfront. “Market volatility is inevitable, and we don’t recommend investors change their strategy in response to short-term market moves.

“Reacting emotionally to short-term market movements or trying to time the market often leads to poor outcomes,” he continued. “Instead, we encourage clients to focus on their long-term goals and what they can control — taxes, fees and diversification.”

Here’s what savvy investors are doing in the current economic climate.

Continuing To Invest Despite Market Swings

Savvy investors aren’t pulling out funds due to market downswings — in fact, they’re investing more.

“At Wealthfront, it’s been encouraging to see our clients continue to invest through the market volatility,” Michalka said. “Deposits into our globally diversified index fund portfolios increased by 330% on the day after tariffs were announced, and stayed elevated [the next day].”

While some of this could be due to investors “buying the dip,” Michalka does not recommend this as an investment strategy.

“We encourage regular investing rather than waiting for what seems like an attractive buying opportunity — for example, waiting for a market decline to invest,” he said. “The general trend of markets is to go up, and if you’re waiting for a ‘dip’ to invest, you may end up forgoing a lot of positive returns until one occurs.

“We think it’s best to stick to your investing plan regardless of what the market is doing,” Michalka continued. “That said, short-term stock market declines do offer investment opportunities because it allows you to essentially buy investments while they’re ‘on sale.'”

Diversifying Their Portfolios

Many Wealthfront clients have been taking action to further diversify their investment portfolios, including increasing European and Chinese stock allocations. Since March 1, there has been a nearly 200% increase in clients adding the Vanguard European Stock Index Fund ETF (VGK), and from from Jan. 1 to April 3, the number of clients adding ETFs tracking Chinese stocks have increased by nearly 40%.

“Recent market volatility serves as a timely reminder of the importance of diversification,” Michalka said. “If your portfolio is heavily concentrated in U.S. equities, adding exposure to global markets can be a smart way to build long-term resilience.

“While U.S. stocks have outperformed international markets for much of the past decade, history shows they don’t always lead,” he continued. “So far in 2025, emerging markets have outperformed the U.S. by more than 7%, and developed international markets by over 14%.”

Investors are also increasing their allocations to gold, with the number of Wealthfront clients adding gold ETFs increasing by more than 25% from Jan. 1 to April 3.

“If your portfolio is heavily concentrated in equities, incorporating other assets like bonds or gold can be a smart way to reduce risk to an appropriate level,” Michalka said.

Realizing Tax-Loss Harvesting Benefits

Losing money in the market is never a pleasant experience, but it does provide a tax benefit.

“It’s not fun to watch your portfolio temporarily decline in value when the market is volatile, but tax-loss harvesting can be a silver lining,” Michalka said. “When the value of an investment dips below its purchase price, you can sell it at a loss and replace it with a similar investment.

“This allows you to ‘harvest’ the loss and maintain the overall risk and return characteristics of your portfolio. Come tax time, you can use that loss to lower your tax bill, generating a ‘tax alpha’ or incremental return from tax-loss harvesting.”

Following the April 2 tariff announcement when the market dipped, Wealthfront traded over $4.5 billion on behalf of its clients, and helped them realize significant tax-loss harvest benefits. Its software harvested more than $100 million during this time, helping clients reduce their tax bills.

Keeping Enough Cash on Hand To Serve as an Emergency Fund

In February and March, Wealthfront saw more net flows into cash than investments as investor sentiment turned negative. Keeping sufficient funds in cash is always a savvy move.

“Cash provides liquidity for short-term needs and unexpected expenses, while also serving as a stabilizer to protect the value of your portfolio, especially during market downturns,” Michalka said. “A strong emergency fund offers peace of mind, which can be especially important when the market is volatile.

“For most people, this means setting aside enough cash to cover three to six months’ worth of living expenses,” he continued. “The ideal amount will depend on factors such as your age, profession, investable assets and the financial needs of your extended family.”

Michalka recommended keeping an emergency fund in a high-yield savings account.

“This strategy allows you to earn a return on your cash while keeping the money you need for short-term purposes — or may need for an emergency — safe.”

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