During unpredictable times and throughout market volatility, many investors start to question their long-term investment plans. Some may be tempted to bow out of the market completely and stay on the sidelines until it seems sensible to jump back in. While market volatility can be unnerving, it’s times like these when it’s vital to keep a sharp eye on your portfolio and its long-term interests. Here are some useful tips on how you can weather this volatility.
Tip 1: Remember the long term:
Unless you’re passionate about day trading, it’s likely that your investments will have a time horizon of several years, instead of several hours. While Geopolitical and COVID-19 matters cause investment market fluctuations, these are as often short lived as their losses suggest.
History will tell that for every unique economic challenge we’ve had, we were able to adapt to the changes and emerge stronger than before. We have seen a substantial recovery in the value of assets and in some cases, a resurgence that exceeded the previous highs of your investment portfolio.
With that being said, always be mindful of your investment time horizon when buying or selling equities on the market.
Tip 2: Diversify strategies to minimise risk:
No one can predict the market, not even the world’s best traders and portfolio managers. The key is to reduce exposure to uncontrollable risk by ensuring you don’t put all your eggs in one basket. Diversification of assets is your best friend when it comes to investing on a global scale. Investing in a wide variety of markets is proven to be more ideal than investing in an individual stock.
Tip 3: Don’t fall for FOMO or ‘finfluencers’
At one point we’ve all experienced FOMO or the fear of missing out – whether it’s about scoring a reservation at the hottest restaurant or the flurry of European summers broadcast over your socials in July. While it may be difficult to curb this sentiment in general, exercise self-will whenmaking investment decisions. Sometimes, the feeling of investment FOMO is heightened when we start talking to our friends, families or even taking advice from Finfluencers – individuals who use social media as a platform to share financial advice without a license. Remember, popularity doesn’t equal credibility. It is practical to do your research so you can be well-informed.
Tip 4: Speak with your adviser:
If you’re concerned about the performance of your investment portfolio, the best course of action is to speak with your advisor. Your advisor is equipped with the knowledge to help you traverse these situations and can guide you as to what comes next. It’s possible that you may be risk averse, and the market level of risk you are taking is not suitable for you. Your adviser can tailor your portfolio to suit your needs, so you’re at peace.
The Bottom Line
Market volatility is inescapable – it’s an inherent feature of the markets to fluctuate over the short term. Trying to find the perfect time is challenging so it is best to maintain a long-term horizon and recognise the spike in market volatility that will influence your investment portfolio.
For more information on how we can support you in times of market volatility, please contact your local William Buck Wealth Advisor.