Are Your Investments Prepared for Further Market Volatility?
Times of market volatility can be negative on investments but also create opportunities. How you manage your portfolio and the strategies you have in place will determine your results!
We are currently in a period of high Volatility, and this is to continue. We are expected to see further falls and then further rebounds in the weeks and months ahead while the US and President Trump work out what they are doing.
How do you manage the risk aspect of your investments within superannuation and also outside of super? How do you feel when the market drops, and you see your investments reduce and retirement funds take a beating ? Do you panic and think you should sell ? or do you think that’s great, I will invest further funds? History shows us that markets rebound and do recover.
The key rule of investing is TIME – Investing is for the long term and not short term.
When you look at any 30-year period across the history of the ASX and Global equities you will see major dips and major wins. For example, The Global Financial Crisis in 2008 and Covid 19 in early 2020.
You will see that no one lost money if they stayed invested over the entirety of these periods within their super and outside in an Investment Equity (share) portfolio.
Superannuation is for the long term, over 30 years. Superannuation is a relatively calculated and safeguarded risk. Over the average lifetime, the share market will have several dips and several rebounds. The market has a strong history of correcting itself. The average dip takes 120 days to recover! We recommend you keep investing in superannuation and boosting your super contributions when you can through volatile times to receive the tax benefits and build wealth for your future.
Your superannuation portfolio should offer diversification and provide an asset allocation summary for you to review at least annually. It’s important to check your super fund is invested according to your Risk profile. If you are a conservative person and do not like market volatility, then its important your investment strategy reflects this. However, a conservative profile should still include diversification.
Diversification is to spread your investments across different asset classes and regions. Make sure you have a balance of different investment classes such as, Shares, Property, Cash and Fixed Income within your super account. Diversify over geographical locations including USA, Asia, and International markets. Reviewing your investments is critical in times of volatility.
It’s important to make sure you understand your investment strategy and stick to it. If you do not have an investment strategy for these times, please call us.