Discipline and patience are rewarded in the long run.

Market volatilityWith concerns about China’s economic slowdown and the drop in global oil prices, 2016 has had a bumpy start in the financial markets.

Tim Buckley, chief investment officer at Vanguard, says the volatility has been expected for some time. “We just came off a long stretch of remarkably tame markets, so the sudden surge in volatility is going to feel worse than it actually is,” he said. “The best thing investors can do is tune out the noise, and invest according to their long-term goals, not on what’s happening in financial markets.”

This article by Vanguard, “Volatility is here to stay: What you can do about it”, notes “…since the bottom of the financial crisis in 2009, markets have staged one of the strongest recoveries in history. What makes the last few years particularly unique is the remarkably smooth and uninterrupted ride up.”

It goes on to say, “But periods of low volatility—like high volatility—don’t last forever.”

Our advice, like that offered in Vanguard’s article, is to keep a cool head in times of market volatility:

“Save yourself the stress, and anchor your investment goals and decisions in a well-diversified long-term plan that you can stick with through all market conditions,” says Mr. Buckley. “History has shown the market rewards discipline and patience over the long run.”

5 Financial develops well-thought-out financial strategies for our clients that are customised to their specific situation, goals, risk tolerance and timeframe. We also rebalance our clients’ portfolios periodically, to ensure they remain diversified with a weighting that’s aligned to their strategic asset allocation. (And a bonus of doing this in times of market volatility is the scope it offers to buy assets that have dropped in value, and therefore obtain them more cheaply, and to sell assets that have grown in value.)

As a client, your wealth management adviser is available to you over the long term. This enables you to check in on a regular basis to ask any questions, or to run any important financial decisions by your adviser. You are also invited in for a full review on an annual basis, to make any adjustments to your strategy (where needed).

If you are not a client of 5 Financial but are interested in finding out more about how we can help you strengthen your financial position and reach your goals, contact us. An initial consultation is at no cost or obligation. Schedule an appointment today.

2018-01-22T08:14:31+00:00 January 21st, 2016|