Russia’s invasion of Ukraine is an existential disaster for Ukraine and its people, a humanitarian crisis for bordering nations, and a geopolitical and military threat for NATO and the U.S. It also continues to impact financial markets. As stocks fluctuate and talks of even higher inflation circulate, investors want to know what short-term and long-term impacts the conflict might have on their own financial health.

No one knows how long the conflict will last. But it will certainly have a major macroeconomic impact on Europe. The European Union buys nearly all of its oil and most of its natural gas from Russia.

Economic Impact on the U.S.

By contrast, the U.S. does very little trade with Ukraine or Russia. We aren't sending troops directly into the war. U.S. energy companies have said they would work to help fill the energy-supply gap for Europe. Overall, the invasion should not affect the U.S.’s GDP, nor is it likely to boost our unemployment.

Worst case, it might put upward pressure on our inflation — and that is no small concern. The price of oil is the number-one inflationary concern for Americans. It not only hits our wallet every time we stop at a gas station, it also affects our psyche: We feel the pinch every time the price ticks a hair higher on gas stations’ signs. The increases are in our face and, even for people driving electric vehicles, a constant reminder that costs are increasing.

Energy prices were already relatively high before Russia’s attack on Ukraine. They will most likely continue to rise. As we saw in the 1970s, hikes in oil prices will likely permeate through the entire economy.

Increased fuel costs also make shipping more expensive. Supply chain issues have undermined our economy throughout the pandemic. Logistics experts have predicted an improving supply-chain picture over the next year, but difficulties appear to be persisting well into 2022. Distribution challenges coupled with oil prices could boost inflation and further the financial strain on companies and consumers alike.

These woes and worries have burdened stock markets around the world. In the U.S., the Dow, S&P 500 and Nasdaq indexes have fluctuated tremendously, with precipitous falls followed by major rebounds. The VIX — a popular measure of stock market volatility — is trending toward five-year highs, although so far it remains well below the historic highs it reached in October 2008 and March 2020.

Navigating the Uncertainties

What does all this mean for individual investors? When faced with so many unknowns and so much volatility, my perspective always returns to an old saying: “Don’t try to catch a falling knife. Wait for it to land first.”

If you’re a trader, it’s prudent to wait for the market to move sideways before making any big changes. Trading is a tough enough game, and I don’t recommend it for most people. But even diehard traders should take a serious look at today’s volatility and consider keeping their powder dry until the market works out its kinks.

Real investors should stick to a long-term strategy and look for opportunities to use the market’s ups and downs in service of that strategy. Have a list of the companies you want to own for the long haul. Then buy those stocks on the dips. Steer clear of “financial landmines” such as long-term bonds and cryptocurrencies. And avoid so-called “COVID success stocks” like Zoom (ZM) and the social-media companies (e.g. FB, TWTR, MSFT, SNAP).

If inflation is your primary worry, make sure you are retaining your purchasing power with dividend-paying stocks like IBM (IBM), Intel (INTC), Johnson & Johnson (JNJ), and Procter & Gamble (PG). Consider rolling over to a pre-taxed Roth IRA. You’ll pay taxes now, at a lower rate, and withdraw funds tax-free in retirement when you’re in a higher tax bracket.

As always, diversify your portfolio into two main buckets: Assets to meet your short-term needs, and long-term investments to meet your retirement needs. The short-term bucket would include assets like CDs, money-market accounts and high-yield savings accounts. The long-term bucket would include investments in a 401(k) (or TSP, if you have access to one), a traditional IRA or Roth IRA.

What should you keep out of both those buckets? Politics. Never let your financial health be swayed by partisan passions. No matter who’s in office — or who wants to be — you own your financial future.

Geopolitical conflicts come and go. What’s happening in Ukraine — as terrible and historically consequential as it is — need not alter your own long-term investing strategy. Cover your wallet