Media reports keep on harping about market volatility. This makes prospective investors scared about entering the markets. They shun stocks as they fear that they may end up losing their money. As a result they lose out on golden opportunity to make money in the stocks.

But every investor must realize that volatility is an inherent part of stock markets. Instead of shunning volatility, it is very important to make volatility your friend. Here is how.

Focus on your long term goal: It is very easy to be affected by the daily market movements. It can make you sell your holding or stop your investments. However this is going to affect your goal achievement. Instead if you keep your eyes on your long-term goal, you will get better returns. Remember “Your time in the market is more important than timing the market” is the key to successful investing. Just take care to review your portfolio periodically.

Overcome your fears: It is easy to get scared when the market crashes. But remember what goes up comes down and vice versa. Markets work in cycles and while your stocks may lose value in the short-term, they will recover their lost ground over a period of time. Also when the market crashes, find out if the crash is due to change in fundamentals or due to some event that is not related to your stocks’ fundamentals.

Diversification: The secret to protecting your investments is diversification. Spread your investments amongst stocks of different sectors, capitalizations as well as amongst asset classes like bank deposits, gilts, gold, real estate and stocks.

Invest in quality stocks: Stocks with strong fundamentals tend to recover faster than those with weak fundamentals. So it is better to invest in such stocks with a long-term perspective ( at least 4-5 years). In fact you can look at any market crash as an opportunity to buy such stocks at cheap prices.

In short, don’t let market volatility scare you. It is the nature of the stocks to be volatile. Use it smartly to benefit from it by using the tips mentioned above.