Answering Market Uncertainty: Why It Is Important to Take a Longer View Towards Your Investments

Right now, the international markets are volatile. While global growth has been strong for the past few years, it seems to be slowing, and uncertainty has replaced optimism.

You may have noticed your KiwiSaver dip, particularly if you have invested in Growth options. Or your portfolio of shares performs worse than expected. You may be wondering: why is that? Periods of volatility are often associated with things like international political uncertainty, or changing tensions among long-term trading partners. It means an increase in trading that occurs, as rises and falls become sharper. Perhaps most importantly, given the current trading situation between the United States and China, volatility is unlikely to drastically improve in the short-term. Perhaps emerging volatility is our new normal. It is hard to say.

What Collaborative Consulting does understand is that volatility often spooks newer investors. These are investors who may, during periods of volatility, pull their investments and exit the market. When you compare that to the fact that we’ve had a long run of stable, predictable growth, the current volatility can seem downright alarming. And the natural response of people new to managing their wealth through financial investments is to run.

So, what’s the answer? It depends on the nature of your investments, your goals, and your timeframe. At Collaborative Consulting we encourage you to scrutinise your investments closely. What investments are performing well? And what investments are tanking? What are the long-term outlooks of your various investments? What were your expectations of your various investments when you decided on your investment strategy? How active or passive are you when it comes to the market?

We want to emphasise the long-view. Volatile markets provide an excellent opportunity to examine your strategy and consult with your financial advisors. We generally advise against pulling your investments out, thereby locking in the loss incurred. Additionally, this may be a great time to invest, and continue diversifying your assets. With volatile markets come investments that may be undervalued, while still having a strong long-term outlook.

The best thing you can do to understand how to answer market volatility is to understand your investments and your strategy. What were the goals of your original investment? And your expectations? Have they changed simple because of increased uncertainty? Volatility is a natural part of the markets – the important thing to understand is how the return of volatility impacts your strategy. A long-term perspective is will help you see the broader picture.

If you would like to talk about your investments in the face of increased uncertainty, get in touch with Collaborative Consulting. We provide professional, independent investment strategies that are personalised for you, helping you achieve your goals.

Visit the website here: https://cclonline.co.nz.