The world is emerging from some of the most volatile times in living memory.
The COVID-19 pandemic wreaked havoc on global markets and world banks are now drastically increasing interest rates to steady inflation.
It can all seem a little scary for anyone who is trying to build wealth, a nest egg or invest, and indeed we have seen that much of the world has become paralysed.
However, it’s precisely at times like this that the savvy investors pounce, enjoying success and advancing their wealth strategies like never before.
You don’t need to be a financial whiz, either.
Below are some tips on how to invest during volatile times.
Resist the urge to sell
Selling stocks or other assets when markets are falling can make temporary ‘paper’ losses permanent.
During volatile times, it can be difficult to accurately predict which direction it will go, and you may end up selling at a lower price than you had hoped for.
You could also miss out on future gains if the market bounces back.
For this reason, it’s generally advisable to have a firm plan in place that helps you to avoid making impulsive decisions when markets are falling in the short-term.
The best way to ensure you are protected during volatile times is to maintain a balanced portfolio.
When you diversify your investments, you’re not putting all of your eggs in one basket. Instead, you’re spreading your money across a variety of different asset classes, such as stocks, bonds and real estate.
Doing this will reduce the overall risk of your portfolio in the event that any one particular investment performs poorly.
A financial adviser can help you decide upon the right mix of investments for your individual financial goals and risk tolerance.
Defend where necessary
During volatile times, it can often be sensible to take an ultra-defensive approach to investing.
This involves shifting your capital to defensive assets, including cash, precious metals or government bonds.
The timing of any such decision, however, is crucial and it is usually best to seek advice before taking such a defensive approach.
Play the long game
As mentioned earlier, it’s important not to become too emotional during short-term price swings and to instead focus on the long game.
Markets will always fluctuate, and it’s almost certain that you’ll experience numerous significant declines over the course of a long investing career.
While bear markets, or times when the market drops more than 20%, may seem daunting, they tend to be relatively short compared to bull markets.
Predicting the exact movements of the market is often difficult, but it’s advisable for all investors to block out the distractions and remain focused on their investment plans.
Trust the experts
With professional wealth management advice, you can capitalise on today’s circumstances and take giant strides towards your goals.
Heard Financial help you overcome the uncertainty of the financial markets, providing expert guidance and independent support for your investment and wealth strategy, creating a prosperous future for you and your family.
For a no obligation discussion about your financial planning needs, contact us today.
This information may be regarded as general advice. That is, your personal objectives, needs or financial situations were not taken into account when preparing this information.
Accordingly, you should consider the appropriateness of any general advice we have given you, having regard to your own objectives, financial situation and needs before acting on it. Where the information relates to a particular financial product, you should obtain and consider the relevant product disclosure statement before making any decision to purchase that financial product.