In the last six months, the Australian Share market dropped 15%, recovered by about 9% and then dropped another 10% and has since risen 5%.

Russia is continuing to bomb Ukraine. Many European countries are not sure where they will get their energy to keep themselves warm during winter. China is still trying to achieve COVID zero and has lockdowns in many cities and towns. OPEC has decided to reduce oil production which will more than likely increase the price of petrol. Inflation is running rampant, with Germany recording 10% and the USA nearly 9%. Many countries are either in or will soon be in a recession.

On a local level, many parts of Eastern Australia are experiencing floods. The restrictions around COVID have been pretty much removed. The Reserve Bank is increasing interest rates to reduce how much we have to spend to try and stop inflation. The Government is continuing to commit to the next stage of tax cuts which will give us more money to spend. House prices, especially in the major capital cities, continue to fall. Qantas is expected to make its first profit for a few years.

With all of this going on, it is no wonder people, including professional investment managers don’t know what the market is going to do in the short term.

Here, and in the next article, I am going to outline the things you need to do to manage your investments in times of increased volatility.

Here’s the first 10 things to do to manage your investments in times of increased volatility.

  1. When the share market has fallen in the past, it has never failed to rise above its previous high.
  2. If you have a well thought out plan for the future, don’t abandon it.
  3. Stay invested. While money in the bank may make you feel better, rising inflation will guarantee you are worse off.
  4. Don’t hang on to poor investments. By poor investments, I mean ones that were based on speculation or emotion more than anything else. If it is not a well-considered investment, it is just gambling.
  5. Stay diversified. Assuming there was a good reason why you invested in the assets you have, keep them.
  6. Don’t bury your head in the sand and hope it all goes away. Take an active interest in what is going on. You won’t spot any new opportunities if you don’t.
  7. Resist the urge to sell based solely on recent market movements. This doesn’t mean you hold blindly, but don’t sell because of fear.
  8. Take the long-term view. Good investments may underperform for a while, but they will always be good investments. Be patient.
  9. The best time to invest and the worst time to sell is when the market is most pessimistic.
  10. Timing markets and trying to pick when to buy and sell is hard. Remember you need to pick both the top and the bottom. You might be lucky once, but can you be lucky twice? Don’t do it.

I will run you through the remaining 10 things in the next article.

The most important thing, regardless of whether the asset prices are volatile like they are now, is to have a plan that helps you achieve your goals.

At Construct Wealth, we specialise in helping busy people put in place a plan that gives them the confidence and certainty that they can achieve their goals.

If you want to know what type of plan would suit you, book a chat via the button below or contact us  at office@constructwealth.com.au or 0417 034 252.

About the Author
Phil Harvey is an independent financial adviser. In 2017 Phil set up his company Construct Wealth to help clients best manage their finances so they focus on what is important to them. He is a founding member of the Profession of Independent Financial Advisers and a tax financial adviser, registered with the Tax Practitioners Board.

General Advice Warning
This advice contains general information. It may not be suitable to you because it does not consider your personal circumstances. Phil Harvey and Construct Wealth are authorised representatives of Independent Financial Advisers Australia (AFSL 464629)

See related articles