3 Things Successful Investors Do In Volatile Times

Finance & Insurance

One would be forgiven for fearing the turmoil of the world. With the news awash with suicide bomb attacks; trucks that plough into innocent pedestrians and the political world resembling teenage pop concert. Leaders have come and left the stage, firing up audiences with wild statements and leaving with wardrobe malfunctions.

Of course, the share markets are a reflection of the world – sometimes delayed, sometimes larger, sometimes smaller, but a reflection all the same.

So in a world where there is such extreme volatility and uncertainty – how do we keep our money safe and still manage to generate the required return to achieve long term growth?

One of the first lessons in making money is ‘to buy at a low price and sell at a higher price’. The concept is easy, but in practice much harder. While the term FOMO is relatively new (or so over as we are in the digital age and have already moved on), the emotion has been around since the beginning of time.  In a world of extreme volatility and instant news feed – how easy is it ‘to buy high’ thinking we are missing out and ‘sell low’ thinking the world is imploding. Being subject to FOMO in one way you can either gradually erode or quickly destroy your wealth.

We also have to be realistic – while there is a reasonably low probability of recession, global growth is pretty pathetic and developed markets are showing signs of being overvalued. At some point, pumping money into the system can be equated to pushing on a string. In other words, the last few years have been pretty kind to your portfolio, but we are now in a different environment, we need to exhale and lower our expectations. Yes, there may be higher returns out there, but they are in riskier assets and walking out on a cliff in a volatile and uncertain world is not a wise strategy.

While returns are pretty low now, they will be higher further down the path. It is important to be patient and open to opportunities as they present themselves. For if there is one truth about markets – it’s that they move in cycles and what goes down will eventually go up again.

So what are the three key lessons for success in volatile times:

1. Keep calm;
2. Stick to your long term strategy and
3. Stop sitting in front of your computer – it is a gorgeous Sydney, winters day and there are much more enjoyable things to do

Of course, if you don’t have a clear long term strategy, now would be a good time to get in touch with a financial planner.

Disclaimer
Marisa Hoffenberg and Growth Point Financial Pty, Ltd. Are Authorised Representatives of Synchron, ABN 33 007 207 650, 243313. This is of a general nature only and is not intended as personal advice. It does not take into account your particular investment objectives, financial situation and needs. Before making a financial decision you should assess whether the advice is appropriate for your individual investment objectives, financial situation and particular needs. We recommend that you consult a professional financial adviser who will assist you. The information and certain references, where indicated, are taken from sources believed to be accurate and correct. To the extent permitted by the law, Synchron, its representatives, officers and employees accept no liability for any person that relies on the information contained herein.