Last year, a relatively narrow band of stocks and stock sectors accounted for the overall performance of the market. People who invested in these stocks were quite pleased with the year-end results of their investments. Those who did not, were not.
On the bond front, the Federal Reserve’s decision to raise interest rates three times last year took its tool on bond prices. As the rates rose, bond prices fell.
For investors with available money, higher rates were good news as they locked in attractive rates on their long term bonds. Those investors who already owned bonds, however, were less impressed as they watched their bonds drop in value as rates rose.

As an investor, what should you do in light of last year’s market performance? Here are six timeless tips for investing in both the stock and bond markets. Following these rules will help you survive any market environment.

1) Stay The Course

Once you’ve determined your long tern financial destination and have plotted a course to get there, it’s vital to stay on track.

Hold your bonds until they mature. Declining bond prices can only hurt you if you sell your bonds early. If indeed you hold them until they mature, the amount you originally invested will be returned. In addition, consider laddering the maturities of your bonds. By investing in short, intermediate and long-term bonds, you’ll be ready for any interest rate change. If rates rise, you’ll soon have money to take advantage of those higher rates. If rates fall, you’ll already have higher rates locked in.

2) Stay Invested

Don’t get out of the market because the value of your stocks or bonds has changed. More people are hurt by not being in the market than by being in the market during a downturn.

3) Stay With Quality

When stock prices go down, it’s an opportunity to buy quality companies at bargain prices. Look for stocks issued by companies with histories of solid growth. These stocks can survive market downturns and continue to grow in value. Quality stocks may not be the most glamorous, exciting stocks, but their reliability makes their attractiveness timeless.

4) Stay Diversified

Reduce risk by spreading your investment dollars among a variety of fixed-income and growth investments. Stocks and bonds typically have an inverse relationship when it comes to performance. When stocks rise, bonds typically fall and vice versa. By owning both, you’ll be well-positioned no matter how the market performs.

5) Stay Focused

When it comes to investing, long term performance is what counts. Don’t dwell on what happened last year. Instead, look ahead. If you are still on course to reach your long-term financial destination, a short-term detour is of little consequence.

6) Stay Calm

Successful investors don’t panic when their investments decline or when other investors sell to cut losses or take profits. Investment decisions should never be based on emotions. Rather, they should be based on long-term needs and goals.

To succeed at investing, you should be willing to make long-term commitments and stick with them. That’s easy to do when the market is performing strongly and posting new records. It’s a bit more difficult when the market or the value of your individual investments drop. By following these six timeless rules, you can stay on course during even the most turbulent market and reached your long-term financial goals as planned.