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Understanding Market Volatility

Posted on: September 9, 2018

Markets are influenced by many things – industrial, economic, political and social factors can all have an impact.  Many of these influences are unpredictable and can lead to increased volatility.  During times of market volatility (ie the ups and downs of the market) it’s important to remember one of the fundamental principles of investing – markets move in cycles.

In times of market volatility, your super or pension balance may decline, but it’s important to remember that volatility is a natural part of the cycle.  There are several principles to focus upon;

  • Don’t lose sight of the bigger picture.  Is your investment a long term investment (eg super or shares)?  Think in years, not days
  • Diversification is one of the most effective ways of managing volatility.  We diversify your portfolio across different economies, countries, industries and asset classes in a bid to minimise risk and help deliver smoother returns over time
  • Understand your risk profile.  All investments carry risk, you tolerance of that risk will depend upon a range of things, your family situation, investment time frame, previous experience.  Ensure that you are investing in line with your personal risk profile

If you are concerned about the constant up and downs of the market, contact us to discuss your concerns and how we can use some of the above tools to ensure you can sleep at night

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