July 10, 2023 | 5 min read
Summary: We will look at strategies to effectively manage investment market fluctuations, from the highs to the lows.
The investment market is known for its cyclical nature, characterised by periods of highs and lows. While market highs can be exhilarating, market lows can be challenging and stressful.
Successful investors understand that both market conditions present unique opportunities. Here, we will look at strategies to effectively cope with those investment market fluctuations.
One of the key principles of successful investing is to adopt a long-term perspective. Trying to time the market or make short-term gains can be risky and unpredictable. Instead, consider focusing on long-term goals and remaining committed to your investment strategy.
Diversification is key. By spreading your investments across various asset classes, sectors, and geographical regions, you can reduce the impact of market volatility on your portfolio. Consider investing in a mix of shares, bonds, real estate, and other assets to balance risk and potential returns.
Adopting a regular investment approach can be beneficial during market highs and lows. By investing a fixed amount at regular intervals, you automatically buy more shares when prices are low and fewer shares when prices are high. This strategy helps mitigate the impact of market timing.
Conduct thorough research before making investment decisions. Understand the underlying fundamentals of the companies or assets you are considering, as well as the broader economic and market trends.
Also, stay updated with the latest investment news. Regularly read reputable financial publications, follow industry experts, and consider seeking advice from a financial expert.
Knowledge empowers you to make informed investment decisions and better understand the reasons behind market movements.
Periodically review and rebalance your portfolio to align it with your long-term goals and risk tolerance.
During market highs, some investments may become overvalued, while during market lows, certain assets may be undervalued. Rebalancing ensures that your portfolio stays diversified and aligned with your investment strategy.
Having an emergency fund is crucial to withstand market lows or unexpected financial challenges.
Aim to have at least three to six months' worth of living expenses set aside in an easily accessible account. This will provide a safety net, allowing you to navigate through market downturns without being forced to sell your investments at a loss.
Consider consulting with a qualified financial adviser who understands the Australian investment market (and the global market if you have overseas interests in your portfolio).
They can provide personalised guidance based on your specific circumstances, risk tolerance, and investment goals. A financial expert can also help you stay disciplined during market highs and lows, providing an objective perspective and helping you avoid emotional decision-making.
Successful investing requires discipline and patience. It is essential to stick to your investment plan and resist the temptation to chase short-term gains or react to market noise. By maintaining a long-term perspective and staying disciplined, you are more likely to achieve your financial goals despite market fluctuations.
*Based on SuperRatings Fund Crediting Rate Survey, SR50 MySuper Index to March 2023.
Compared to most funds, we offer more investment options to provide you with greater choice. Our MySuper Growth Portfolio has also delivered competitive returns over 3 and 5 years.*
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This article has been prepared by NULIS Nominees (Australia) Limited ABN 80 008 515 633 AFSL 236465 (NULIS) as trustee of the MLC Super Fund ABN 70 732 426 024. NULIS is part of the Insignia Financial group of companies comprising Insignia Financial Ltd ABN 49 100 103 722 and its related bodies corporate (‘Insignia Financial Group’). The information in this article is current as at November 2023 and may be subject to change. This information may constitute general advice. The information in this article is general in nature and does not take into account your personal objectives, financial situation or needs. You should consider obtaining independent advice before making any financial decisions based on this information. It is recommended that you consider the relevant Product Disclosure Statement (PDS) and Target Market Determination (TMD) before you make any decisions about your superannuation. You can obtain the latest copy of the PDS (or other disclosure documents) and TMD by calling us on 132 652 or by searching for the applicable product at mlc.com.au. You should not rely on this article to determine your personal tax obligations. Please consult a registered tax agent for this purpose. Opinions constitute our judgement at the time of issue. The case study examples (if any) provided in this article have been included for illustrative purposes only and should not be relied upon for decision making. Subject to terms implied by law and which cannot be excluded, neither NULIS nor any member of the Insignia Financial Group accept responsibility for any loss or liability incurred by you in respect of any error, omission or misrepresentation in the information in this communication.