Five rules for investing during volatile times
The latest round of market volatility may have left a temporary dent on the balance sheets of many investors, but history tells us markets always recover. Unfortunately, history also tells us that panic and anxiety can lead some investors to decisions that create much bigger holes over the long-term. Here are five ways to avoid bad investment decisions.
1 Stick to your guns
Understand what you’re trying to achieve and how long you’re prepared to invest. The longer your investment timeframe, the more likely you’ll experience some form of short-term market volatility — make sure you’re comfortable with that prospect.
2 Understand how you feel about investment risk
Your investment strategy should reflect your attitude to investment risk — for example, investing in growth assets like shares can increase your long-term returns, but it’s likely you’ll experience greater short-term fluctuations than if you were investing in defensive assets like cash. Take a risk profile assessment to understand your tolerance to market volatility.
3 Invest in quality
Volatile markets aren’t the place for speculation, unless you’re prepared to lose your money on a bet that might or might not come good. Look for quality investments, and get a second opinion from your financial adviser.
4 Don’t try to time the market
Investing would be simple if you could always pick the best time to put your money in and take it out. Remember that time in the market, not timing the market, is the key.
5 Get advice from a qualified source
If you’re really serious about something — whether it’s on a sporting field, in business — you should seek advice. Building and managing your wealth is no different. If you don’t have a financial adviser, use our adviser referral service to find an adviser in your area.
Sourced from BT Finance Website. https://www.bt.com.au/investments/investments.asp
The Art of Investing is not aligned or affiliated with BT Finance.
