"There are many factors at play. The geopolitical uncertainty we are witnessing and how the U.S. Federal Reserve acts are examples of things that influence market sentiment from week to week and day to day," says Åhrman.
The Stockholm Stock Exchange recently had its worst day in over a year, with a drop of more than 3%.
"We saw companies across the board take a hit. Both smaller and larger companies were affected," Åhrman notes.
"It Might Get Worse Before It Gets Better"
She believes that as a small investor, you should be prepared for the market to possibly drop further before any potential recovery. The current volatility could lead to further price swings and large amounts of capital exiting the market.
Åhrman also points to the U.S. election and potential interest rate cuts as crucial factors that will determine the stock market's development through the end of the year. Sluggish economic growth affects corporate profits, which in turn affects the stock market.
"It is difficult to predict how the stock and mutual fund markets will react, especially with the growing concerns about the U.S. economy. But small investors need to be prepared for the possibility that things might get worse before they get better," says Åhrman.
Stick to Your Long-Term Strategy
For those saving for retirement in the long term, short-term market declines should not have a significant impact, Åhrman argues. The important thing is to stick to your long-term strategy and continue saving regularly, even when the market is volatile.
Åhrman also emphasizes the importance of having a well-diversified portfolio to spread risk:
"For those who don't want to or can't engage in individual stocks, mutual funds are a good option. By investing in mutual funds, you automatically spread your risks since a fund consists of many different stocks or other assets – but of course, funds are also affected by uncertainty."