Keep calm: you can survive market volatility with a plan

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The health of an economy is often based on stock market volatility. As the stock market rises and falls within short timeframes, investors get nervous. It’s the unpredictable nature of market volatility that creates anxiety and fear amongst the masses and the media. This roller coaster can make you want to cut your losses, bank what’s left and walk away from investing.

But the truth is, market volatility is completely normal. You can survive and weather the storm with a personal financial plan. Focus on growing your wealth, rather than crazy headlines from the money market. Here’s the secret to keeping calm in a volatile market:

A personalised financial plan can provide you with security and certainty. A financial expert can balance your portfolio and ensure your investments are protected.

Let’s take a look at market volatility and what you need to know.

Saving Australian Money in a jar for retirement

Your super is your stock portfolio

Market volatility mostly refers to the fluctuations of the stock market, but if you don’t have a stock portfolio, why should you care about market volatility?

All Australians have a superannuation account (sometimes multiple accounts!) and your super is your stock portfolio. Your employer/s make super contributions throughout your working life, and this super is invested in the stock market.

The Australian superannuation market is valued at $3.4 trillion (yes, trillion, it’s not a typo). Superannuation makes up a huge portion of the stock market, and market volatility will directly impact your super balance.

Step Up financial planners will tell you: Superannuation is a long-term investment. Remember, you don’t have access to super until you’re 60 years+. So, sit tight and review it annually. Taking a daily analysis is unproductive. Be assured that experienced, qualified financial experts are managing these funds. They are pragmatic with investment choices, not emotional.

Market volatility over the long term is completely normal. A strategic fund manager will know how to use volatility to grow the fund for all account holders. If you’re unsure about the performance of your super investment, it’s time to meet with a financial planner who can make sense of it for you.

Tired businessman sitting in front of the laptop

Avoid knee-jerk reactions

Of course, if you’re financially savvy enough to have your own Self-Managed Super Fund (SMSF) or a stock portfolio, market volatility may cause you some concern. The risk with building a stock portfolio is not knowing exactly when and how the market will shift. If a stock falls, there’s an inner voice that tells you to cut your losses and sell! But emotional reactions can be the ultimate downfall for any investors.

While you may make every effort to stay informed, it’s impossible to keep track of an unpredictable market.

Who knows when, why and how the market will shift! In fact, volatile markets can rally and decline within a day. It’s complicated, even if it’s your day job. Often it appears that there is no rhyme or reason for the changes occurring within a volatile market.

Step Up financial planners will tell you: Seek financial expertise if you are managing your own stock portfolios. The key to long-term success is a balanced portfolio. Ideally, you should collaborate with a financial planner to ensure your entire portfolio is building your wealth in a cohesive way. Setting up a strategic financial plan will create a balanced portfolio and one that’s protected in a volatile market.

agents working in real estate investment and home insurance signing contracts

What about the property market?

Australians have witnessed several decades of consistent growth in the property market. Volatility within the property market does occur, but the perception of unpredictability is lessened by the continued growth and the size of the investment. Property investment in Sydney is a big commitment: investors need access to mortgages and this makes the market turnover rate slower. Stamp duty in NSW also ensures investors think twice before jumping into and out of property.

Step Up financial planners will tell you: Property is generally not as volatile as the stock market. But, like any investment, you must be aware that property can rally and decline. Most of the time, property and the stock market don’t fluctuate together; if one falls, the other rises. So, balancing your investment portfolio will reduce the risk of financial loss. A personalised financial plan will consider the value your property and provide guidance on how to protect it.

Sit tight, you need a plan

To grow your wealth in a methodical and productive way, you need a plan. A personalised financial plan will support you with a balanced portfolio that’s protected, no matter if there is market volatility or not. It will give you peace of mind that market volatility is normal and keep you calm as you read those crazy headlines.

The Step Up team offers comprehensive services to support a broad range of client needs. From managing cashflow and debt, to retirement planning, SMSFs and aged care advice. We support all demographics and want to make a difference in your life.

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Need more information? Get in touch with Step Up Financial

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      Orange, NSW 2800

      PO Box 2499
      Orange, NSW 2800

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