Recent headlines have been ‘doom and gloom’ with scary reports pointing to market losses of “$100billion” striking fear for investors around the world. Whilst good click-bait for media companies, it is important to take a step back with a clear head and not to react too quickly.
We are keeping a close eye on our clients’ portfolios and adjusting where necessary but generally they are holding up well. Balanced portfolios typically include around 26% in global equities. Ours are sitting at around 21% with less investment in USA stocks – some of the hardest hit in recent weeks. As advisers, our job is to manage the risk and we encourage you to think long term and stay the course.
How to deal with market volatility
With markets steadily rising since 2023 it can be easy to get lulled into complacency. History has proven over again that volatility is always a factor – the good times don’t roll on forever and bad times don’t last either. Over three, five and 10-years returns have been strongly positive despite the massive Covid slump experienced in 2020.
Avoiding reactionary responses to market volatility is almost always the best course of action. Often the worst thing you can do is act after the event. If you decide to cash out when the market slumps, you will find you have to reinvest more to get back to square.
Diverse portfolios
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.
Be assured we are monitoring the market closely and actively employing strategies to ensure our clients long term interests. If you have any concerns, please get in touch.
General Advice Warning: The information provided in this article is general in nature and does not consider 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. DFS (Ipswich) Pty Ltd ABN 86 100 184 521 and their advisers are authorised representatives of Fortnum Private Wealth LTD ABN 54139889535 AFSL 357306.
