How to manage market volatility
Reasons behind volatility will vary. But, no matter where you are in your investment journey, seeing headlines detailing consecutive down days in markets and the flow-on effect on your investment portfolio tends to induce concern.
We invest knowing down days will occur, and it’s how we react to them that will determine your long-term investment success. Here’s how you and InvestSMART help manage volatile times and keep your investments on track:
- Diversification is the key to lowering volatility over time. InvestSMART rebalances your portfolio from time to time, ensuring your portfolio maintains a blend of assets in line with the mandate of each portfolio. In short, we make sure a balanced portfolio remains balanced. It gives you confidence your portfolio blend and risk is in line with your expectations.
- Make sure your investment portfolio is in line with your investment time horizon. The length of the timeframe directly correlates to the breakdown of growth and defensive assets each portfolio invests in. The longer the timeframe, the higher the growth assets and the greater the volatility. That timeframe allows for market downturns and provides time to recover. InvestSMART makes this easy for investors by clearly indicating the recommended timeframe for each portfolio.
- What you can do to help Focus on your timeframe. You know downturns happen. It’s par for the course when it comes to investing. Stick to your timeframe, continue your regular contributions and add more funds if you can.
I’d recommend this excellent piece by my colleague John Addis on How to Worry Better for further reading.
Finally, we’re here to help. Make use of the chat function, email or call on 1300 880 160. We cannot provide personal/specific advice, but we can talk about investing generally and account management.
Frequently Asked Questions about this Article…
Market volatility refers to the fluctuations in the market that can cause the value of your investment portfolio to rise and fall. It's a natural part of investing, and understanding how to manage it is crucial for long-term success.
Diversification helps manage market volatility by spreading your investments across different asset classes. This reduces risk and ensures that your portfolio remains balanced, aligning with your investment goals and risk tolerance.
Aligning your investment portfolio with your time horizon is important because it determines the mix of growth and defensive assets. A longer time horizon allows for more growth assets, which can lead to higher volatility but also provides time to recover from market downturns.
During market downturns, focus on your investment timeframe and continue making regular contributions. If possible, add more funds to take advantage of lower prices, keeping your long-term goals in mind.
InvestSMART helps manage your portfolio during volatile times by rebalancing it to maintain a balanced mix of assets. This ensures your portfolio stays aligned with your investment mandate and risk expectations.
While InvestSMART cannot provide personalized or specific investment advice, they offer general guidance on investing and account management through their chat function, email, or by calling 1300 880 160.
For further reading on managing investment worries, consider the article 'How to Worry Better' by John Addis, which offers insights into handling investment-related concerns.
InvestSMART rebalances your investment portfolio periodically to ensure it maintains a balanced mix of assets, keeping it aligned with your investment goals and risk tolerance.
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