It’s important to note that alarmist headlines such as, “global markets lose $x trillion” or “the ASX falls $y billion”, whilst true, are unhelpful and misleading.
Bearish market conditions are inevitable but also don’t last forever. As a savvy investor, you can ignore short-term pullbacks of the market (and any commentary that might cause you to veer off course) and remain committed to achieving your long-term vision.
You have the power to follow these suggested steps to weathering market lows and potentially stop yourself from making any emotional decisions.
Tune out the noise
It’s OK to not check your portfolio balance when the market is falling. Turning off the financial news might be smart if it keeps you from making mistakes based on emotional decisions.
Revisit your asset allocation
If you happen to be near retirement or in retirement, or if you simply lose sleep over downturns, you may need to re-evaluate your risk tolerance. We can help you figure out the balance of stocks and bonds best suited to your comfort level with risk and other personal circumstances.
Control what you can: Costs
Expenses eat returns, and their bite is particularly painful during market corrections. We can explain options for removing high-cost investments from your portfolio in ways that minimize the taxes due from their sale.
Set realistic expectations
U.S. stock and bond markets have posted remarkable returns in the past few decades. Statistically speaking, it would be prudent to expect lower returns in the future. We can work with you to develop a plan that still achieves your goals despite potential headwinds of lower returns.
Downturns offer case studies in how different asset-class and sector exposures can help to insulate your portfolio. Speaking with us about risk tolerance, as mentioned above, helps you to better understand your investing style and what’s most important to you. With this greater insight, we can suggest diversification options for your portfolio that blunt the impact of downturns while putting you on track to achieve your financial objectives.
Downturns come and go. The results of a well-designed and faithfully followed plan, on the other hand, can serve you the rest of your life.
Book an appointment online or call us on 08 8208 4777 if you are having any concerns about your financial position in the market and we’ll guide you through these steps to weathering the market lows.
Click here for more information on the market impact of Coronavirus and why you should remain calm as an investor.