Investment04 September 2019

What to do - and what not to do - when markets are volatile

Mark Williams
Mark Williams
Head of Listed Investments and Strategy

Given where we are in the market cycle – now the longest on record – and the increasing likelihood of volatility going forward, it’s questionable whether such a strong rally is sustainable over the remainder of the year without a significant improvement in the earnings outlook.

We believe that the risks are now on the downside and we’re looking to best position the portfolio as defensively as possible, within the constraints of the long-term strategy for each investment option.

If the ups and downs of the investment markets have you second guessing your investment choices, or if you’re wondering whether you should switch to a safer option, we suggest you take a deep breath. Below are some tips to help you through market volatility and stay on course to achieve your financial goals.

Diversification is key

The best way to reduce volatility of your investments is to ensure that you’re sufficiently diversified across asset classes. Generally, a mix of asset classes can be achieved through investing in one of Tasplan’s diversified options where you can select an option to suit, or if you’re in Tasplan OnTrack® this has been done for you based on your age. These provide a mixture of all asset classes, some targeted for growth, such as shares, others are more defensively minded, such as bonds and cash.

Stay focused on the longer term

Downturns are normal and normally are short lived, so it’s important to try and not make decisions based on emotions, focusing on the long-term goal. If you have contributions going into your account, remember that a fall in markets in the short term can be a good thing (you’re buying cheaper). If you’re uncomfortable when markets go down, then it may mean the risk level of your chosen investment option is not appropriate for you.

Don’t try and time the market

Attempting to move in and out of the market can be costly. Generally speaking, we tend to move too late. Moving out of shares into cash after markets have fallen, only to then move back into shares after they’ve recovered, usually means we’re impacted on the way down and on the way up. It’s impossible to consistently predict what markets will do. Even the most experienced investors can get tripped up by market timing.

If you’re concerned about your super account, we recommend you make time to speak to one of our Member Services Consultants.

® Registered to Tasplan Pty Ltd ABN 13 009 563 062.

Past performance isn’t a reliable indicator of future performance.

Investment focus: Tesla, Inc

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