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Tips for Handling a Volatile Investment Market

Financial advisors, in Perth and across the world, are expected to make sense of what can sometimes be a volatile market for investors. At Approved Financial Planners, we have been a trusted name in the Perth market since 2005. We are now backed by parent company AMP Capital, giving us even more resources and information to help investors weather “storms” or volatile periods in the markets.

One of those resources is Dr Shane Oliver, who is the Chief Economist and the Head of Investment Strategy and Economics at AMP Capital. Recently, on the AMP Capital blog, Dr Oliver provided tips for investors during times of volatility. We would like to share them with you.

Handling a Volatile Investment Market

Expect Volatility

According to Dr Oliver, one should expect the market for shares to be volatile. He sees it as “the price you pay” for the eventual long term gains that shares typically produce. For example, Dr Oliver sees recent global volatility as “just a correction” that won’t affect long term returns.*

Selling After a Fall Locks in Your Losses

Dr Oliver points out that those who sell stocks after they fall are turning “a paper loss into a real loss.” He points out that people tend to sell off stocks at precisely the wrong time due to focusing on the short term instead of the long term.

Opportunities Abound

According to Dr Oliver, successful and savvy investors don’t sell when the market is low; they find “opportunities” or undervalued stocks to buy while they are low and wait for them to rise again. He likens it to a “sale at Woolworth’s,” where savvy investors rush in to buy, not sell.

Dividends Remain Constant

According to Dr Oliver, those who are focused on dividends don’t have to worry as long as they have a “well-diversified portfolio,” because dividends are usually unchanged by temporary market volatility.

To learn more or for an individual consult with a financial advisor, call our Perth office today: 08 6462 0888.

*AMP Capital: “Investment opportunities in a volatile market.” 10 September 2015.