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Navigating market volatility | Four strategies for investors

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By Capital Partners Markets and Investments

Investing your hard-earned savings can be scary, especially when volatility strikes and news headlines scream doomsday messages. Even the most experienced investors find volatility unsettling and feel uneasy. While a crystal ball for market predictions will never exist, experts will always look at history to understand cycles and the next steps. We know that when it’s down, it will trend upwards again. Despite this, tips for managing uncertainty during volatility will never be redundant. Here are four tips to help you stay level-headed during volatility.

Stay goals focused

It’s important to remember that volatility is often short-term and can be just a blip on the radar when looking at your long-term plans. Keep your focus on your long-term end goals and don’t let short-term volatility distract you from your long-term objectives. Many investors will panic sell during a crash at a loss, with the objective to ‘buy back in’ when the market bottoms out. Bear markets and crashes will be unpredictable. Safeguard yourself and commit to staying the course, reflecting on your goals when the temptation to sell creeps in. Remember, a professional fiduciary adviser will always be on standby to answer any questions.

Diversify your portfolio

Diversifying your investments will help your portfolio weather market changes, reducing the impact of volatility in one specific area. This means spreading your investments across a variety of sectors, industries, and asset classes. If one sector falls short, you have peace of mind that your other investments can keep you afloat. We know that history has proven it’s impossible to predict with certainty which asset class will outperform, so reduce your risk and remember the age-old saying: don’t place all your eggs in one basket.

Avoid acting on impulse

Don’t let yourself regret decisions made on impulse. During times of volatility, it can be tempting to act on instinct however, these decisions can often result in unnecessary losses. Avoid making hasty decisions and take time to consider your options. Reaching out to discuss your thoughts with your adviser can help cement necessary versus emotionally driven decisions. Remember that successful investing is a long-term game, and that patience is a virtue.

Stay informed but deliberate

Keep yourself up to date with the latest news and developments in the areas that are causing volatility. This can help you react appropriately to market changes, working with a qualified financial adviser to make informed decisions. However, it’s important to strike a balance and be deliberate about how much news you consume. Coverage of recessions and turbulence is unsettling and repetitive. Try not to be sucked in by doomsday headlines. The news can cause us to act out with our emotions. Turn down the news and make a trusted adviser your go-to for trusted insight.

Volatility is a natural part of the market, and while it can be challenging, it can also present opportunities for growth and learning. At every market stage, financial advisers can be invaluable sounding boards to offer support influenced by experience. By staying level-headed and making informed decisions from experts, not headlines, you can navigate periods of volatility and come out stronger on the other side. If this article has resonated with you, our team of certified wealth advisers are all ears, happy to chat over a coffee or lead you in the right direction.

The information provided on this site is of a general nature only and may not be relevant to your particular circumstances. The circumstances of each investor are different and you should seek advice from a financial planner who can consider if these strategies and products are right for you.

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