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We know that market volatility can be off-putting to investors who might be considering equity markets as an investment option. But depending on your financial goals and time frame, market volatility doesn’t need to be a precluding factor when making decisions about your investments.By mitigating the risks that market volatility brings and knowing how to stay calm when the market is in turmoil, equity investments could be the answer to reaching your lifestyle potential.
Attempting to guess when gains and losses are going to happen will only hurt your investment in the long run because market performance is almost impossible to predict. By adjusting your investments this way, you could miss out on the best performing days for your portfolio which are critical for your overall returns. The share market has a historical long term trend upwards, and by stepping in and out of the market you’ll miss out on these benefits.
Levels of volatility can vary so it’s important to understand that volatility is normal and there’s no need to panic. We work with you to figure out your risk profile to ensure you can cope with the levels of volatility that might occur with your chosen investment.Understanding that volatility is a normal part of long-term investing in particular options can help to reduce your concern and worry.
Regular investing can help you reap the benefits of ‘dollar cost averaging’. It means you’re spreading your purchases over a period of time and not locking your investment in at a single day’s rate. By investing this way, you will have opportunities to invest in a falling market which is when good deals can be found.
A diversified portfolio may be the key to managing market volatility. If you’re exposed to a particular industry that may not be performing, it’s likely you’ll also have investments in an industry that is doing well. The differences in asset performances may help to smooth out your return and also minimise risk.
Corrections are a normal part of market cycles and can create opportunities for growth. A correction can make some prices more attractive which gives you the potential for higher than normal returns when the market bounces back.
Don’t underestimate the power of knowing the ‘nuts and bolts’ behind your investment strategy. This includes knowing why and how it has been developed. By understanding your investment strategy, it helps you to be comfortable with the level of volatility expected and you won’t be surprised by short-term market actions or outcomes.
Stay true to your investment strategy and don’t allow the sentiment of the market dictate your actions. If you find you’re getting the confidence wobbles about your investment, speak to an experienced financial planner before making any changes.Take a look at our fact sheet on market volatility which goes into greater detail on why staying calm during unsettling performance periods could benefit you in the long run.
Book an appointment!Email:info@rjswm.com.auThis blog has been prepared by RJS Wealth Management Pty. Ltd. ABN 24 156 207 126. RJS Wealth Management Pty. Ltd. is a Corporate Authorised Representative (No. 438158) of Modoras Pty. Ltd. ABN 86 068 034 908 an Australian Financial Services and Credit Licensee (Number 233209). The information and opinions contained in this blog is general information only and is not intended to represent specific personal advice (Accounting, taxation, financial, insurance or credit). No individual's personal circumstances have been taken into consideration for the preparation of this material. Any individual making a decision to buy, sell or hold any particular financial product should make their own assessment taking into account their own particular circumstances. The information and opinions herein do not constitute any recommendation to purchase, sell or hold any particular financial product. Modoras Pty Ltd recommends that no financial product or financial service be acquired or disposed of or financial strategy adopted without you first obtaining professional personal financial advice suitable and appropriate to your own personal needs, objectives, goals and circumstances. Information, forecasts and opinions contained in this blog can change without notice. Modoras Pty. Ltd. does not guarantee the accuracy of the information at any particular time. Although care has been exercised in compiling the information contained within, Modoras Pty. Ltd. does not warrant that the articles within are free from errors, inaccuracies or omissions. To the extent permissible by law, neither Modoras Pty. Ltd. nor its employees, representatives or agents (including associated and affiliated companies) accept liability for loss or damages incurred as a result of a person acting in reliance of this publication.