15 Sep How To Survive A Volatile Market
When it comes to investing, market volatility is to be expected. Despite common perceptions, money can be and is still made in the share market despite its volatile nature you might just need the right financial planner.
Often in a volatile market, people panic and start to sell down shares. Selling shares after a sudden and dramatic drop in the market is often the worst thing you can do. Selling down shares after a fall in the market means you are securing these losses. Here are a few helpful tips.
1. Know the Market
If you instead stay calm and hold onto these shares over time, the market will generally bounce back. So you may not lose any money at all. The key to surviving in a volatile market is to be patient and to not make any rash financial decisions as a reaction to a sudden decline in the market.
It’s all about time in the market, not timing the market. It’s hard to pick the highest or lowest point in the market, and even the most successful economists get it wrong. Unlike timing the market, time in the market is a long term financial strategy that can provide a healthier return the longer you own the shares. As a result, you are better to invest small portions of money on a regular basis to average out your purchase price and smooth out the effects of market volatility.
2. Smart Investing
If you can avoid investing all of your money at once, it removes the risk that you will invest a large portion of money at the top of the market and you will be a smarter investor for it. It is also important to invest in good quality, blue-chip companies, and plan to invest for the long term.
A good financial strategy to start with is a ‘buy and hold’ strategy, where you invest for the long-term. This will remove the temptation to sell out at the wrong time and potentially cost yourself a lot of money.
A volatile market can be challenging to enter and succeed in, financial planning is a strategic move that can help you make smart investments.
Market crashes are not a thing of the past; they will continue in the future. Nobody can predict exactly when the next one will be or how bad it will be.
Over time there have been several market crashes and world events that have had a huge impact on the share market. The key is to remember that after each one of these crashes, the market has recovered.
The most important thing to remember is not to make impulsive decisions in reaction to market volatility. Stick in there for the long run. Invest in good quality companies. Invest gradually and adopt a ‘buy and hold’ strategy.
Master Your Money Now
You haven’t lost money in the stock market until you sell your shares and crystallise that loss. So when the market is volatile don’t bailout, but instead hang in there for the ride. Master Your Money Now is a financial planning and education service, and we can help you become a smart investor and create financial strategies that work for you.
If this is a topic that you would like to discuss in more detail, please go to www.MasterYourMoneyNow.com.au/getstarted to book in your complimentary 30-minute strategy session.
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Disclaimer: This information is general information only. You should consider the appropriateness of this information with regards to your objectives, financial situation and needs. Past performance does not guarantee future returns.
Chris Carlin is an Authorised Representative (No. 1235031 for financial services and No. 514748 for credit) and Master Your Money Now Pty Ltd ABN 65 627 229 681 is a Corporate Authorised Representative (No. 1265677 for financial services and No. 514747 for credit) of Infocus Securities Australia Pty Ltd ABN 47 097 797 049 AFSL and Australian Credit Licence No. 236523