Market volatility, such as we have seen recently, often causes investors stress. The best way to deal with it may depend on the individual investor. Asking yourself the following three questions can help.

• What is your risk tolerance?

As Michael Kitces of Pinnacle Advisory Group puts it: “now is the time to review what your risk tolerance really is,” asking “did you fool yourself into thinking you had more risk tolerance because you were underperceiving risk” when the market was more stable?

• When do you need the money you have invested?

If you are invested for 10 years or more, selling when the market is down can be a terrible idea that solidifies losses and prevents future gains. If you are in or nearing retirement, however, it may make sense to ensure adequate cash on hand to be able to withstand a volatile market without compounding losses by withdrawing from your equities holdings when they are low. Diversification through high quality bonds is another useful tool. Christin Benz of Morningstar warns that quality matters: “high-quality bonds were a rare pocket of positive returns” in 2015, but lower-quality bonds “tend to perform more like stocks than bonds.”

• How bad is current volatility in the context of market history? 

Howard Silverblatt, senior index analyst for S&P Dow Jones Indices, says the market is relatively calm.  It has been more volatile, based on daily spread between high and low prices, in nine of the last 15 years.