Soaring inflation, rising interest rates, and ongoing geopolitical issues are transforming the investment landscape. Investors can be forgiven for being stressed.
But when markets become volatile and unpredictable, it pays to remain focused on the fundamentals. While each market cycle differs, there are still fundamental lessons that can help steer investors through such inevitable bouts of turmoil.
Diverse portfolios can help mitigate risk
When markets are volatile, diversification will help minimise your risk. It won’t guarantee gains or protect against losses but it’s about managing the risk/reward trade off by selecting a mix of investments to help you achieve more consistent returns over time. If you are well diversified and have limited your exposure to any single asset, you will be less likely to suffer a big loss if a stock tumbles.
Don’t put all of your eggs in one basket.
Take the emotion out of investing.
Dynamic Asset Allocation
Dynamic Asset Allocation removes the emotion out of investing and uses valuations and key metric indicators to take advantage of opportunities in the market. When the market turns and begins to fall, quite often investors reach a point where their nerve is lost, and they sell at the wrong time. By selling out at this point, you can miss the most crucial point; the recovery that will follow. We encourage our clients not to get caught up in the rollercoaster.
Wise words in the Australian Financial Review commentary last week that the recent ‘inflation shock may end up being healthy for markets, if it reminds investors about the importance of managing risk and thinking long term.’
Be assured we are monitoring the market closely and actively employing the above strategies to ensure our clients long term interests. If you have any concerns please get in touch.
We are always working for you.
General Advice Warning: The information provided in this article is general in nature and does not take into account your particular investment objectives, financial situation or insurance needs; we therefore recommend you seek advice tailored to your individual circumstances before making any specific decisions.
Dobbrick Financial Services (Gympie) Pty Ltd ABN 48 931 205 109 & DFS Oakland ABN 64 340 527 395 and their advisers are authorised representatives of Fortnum Private Wealth Ltd ABN 54 139 889 535 AFSL 357306.
