Keeping your cool during tough markets: 10 tips from financial experts

Keeping your cool during tough markets: 10 tips from financial experts
There will always be fluctuations in financial markets. Staying calm and trusting your Craigs investment adviser to take a long-term view during difficult times should be your aim.

The COVID-19 pandemic has been challenging for many in terms of both our physical health and our financial wellbeing. As we exit almost three years of lockdowns and restrictions, we are now facing significant inflationary pressures. These are negatively impacting not only our cost of living but also our major assets – i.e. property and shares.

Admittedly, monitoring your share market investments can seem somewhat of a trivial problem, compared with many other things that might impact our wellbeing. However, it’s disconcerting to see our savings take a dive, especially given we have no control over what financial markets will do next.

Auckland-based Craigs Investment Partners adviser Sandra Quemba offers this critical advice: “Stay calm, and don’t panic. It’s hard not to feel overwhelmed when all the news seems negative, but we don’t make our best decisions under those conditions. It’s easier said than done, but make the effort to take a step back. If you’re nervous and losing sleep, don’t be afraid to take some risk off the table, this could for example be done by increasing your allocation of cash. There’s nothing wrong with doing that, especially if you’re sitting on strong gains, if your shares have grown to represent a larger proportion of your portfolio than originally intended, and most importantly if it will help you sleep at night.

“Having said that, before making any decisions, remind yourself of your investment objectives. If those haven’t changed then perhaps your strategy shouldn’t either.

“Most investors have long-term goals in mind, usually some five, 10 or 20 years into the future, so it makes little sense to react to weekly, monthly, or even yearly volatility.”

“History tells us that over longer time frames, shares will deliver strong returns with remarkable consistency. Investing isn’t about chasing the ups and downs of the market, it’s about building and managing a well-constructed portfolio in line with your goals and objectives,” explains Craigs investment adviser Tanya Osborne.

“It might be tempting to sell up entirely, wait for the rough times to pass and get back in later. That could be the right thing to do if things take a turn for the worse, but only if you’re good enough to time when you should reinvest.

“If you’re a long-term owner of quality businesses, you might be better off just staying the course. Corrections, bear markets and recessions will come and go, but great businesses generally will remain resilient, keep paying dividends and continue finding opportunities to grow.

“If you’re fully invested in shares you naturally open yourself up to the full force of volatile periods, but you’ll do your future self just as much of a disservice by sitting on the sidelines and missing out on the strong periods.

“Making sure you’re well diversified can also keep the stress levels down. Investing isn’t about being ‘in or out’ of the market. Economies, markets and currencies ebb and flow, so hedging your bets across different asset classes, geographies and sectors is the safest route for most investors.

“If you have an investment adviser, it is important to lean on them for support during times like this. As advisers we work closely with our clients to provide tailored advice to build a solid financial plan and portfolio, aligned with their goals.

“We also act as guides through tough market conditions, to provide reassurance and a listening ear to help clients stay disciplined, avoiding poor decisions you could be tempted to make during unnerving periods, and keeping you on track to achieve your long-term objectives.”

“If you’re relatively early in your investment journey, the ups and downs can present opportunities. For those with 10 or 20 years until retirement, periods of weakness in the share market can offer better investment opportunities than times of euphoria where prices are near all-time highs,” explains Sandra.

Craigs Investment Partners invests time and effort into building long-term relationships with clients, to offer personal advice and tailored portfolios. Craigs is one of New Zealand’s leading investment advisory firms, with more than 180 qualified investment advisers across 19 branches from Kerikeri to lnvercargill.

Sandra Quemba and Tanya Osborne are investment advisers in Craigs Investment Partners Auckland branch.

They are also a part of Craigs’ Women’s Wealth, a nationwide adviser-led programme empowering women to achieve financial freedom through increased knowledge and confidence.

To discover what Craigs Investment Partners can offer and to learn more about Women’s Wealth, visit craigsip.com or phone 0800 272 442.

10 ways to navigate this time

1. Try not to panic about market fluctuations. Often easier said than done, this is where a financial adviser can be helpful.

2. If you are feeling anxious, reduce your financial news intake. Perhaps ask your adviser what they suggest for now.

3. Although cycles are completely normal, consider ‘de-risking’ if you are too uncomfortable. Speak with an adviser first.

4. Know your ‘money mindset’. This can help you establish a strategy that will work for you and that you can stick to.

5. Take the emotions and decision making out of the equation by investing regularly.

6. Knowledge provides power, so educate yourself. Visit craigsip.com for articles, podcasts, videos and seminars.

7. Remind yourself of your objectives. If they haven’t changed, your strategy probably shouldn’t change either.

8. Take control of what you can control – things like your budget, your debt, your emergency fund, and your knowledge.

9. Reframe this as an opportunity. Your adviser can chat to you about what makes financial sense during downturns.

10. Lean on an adviser to help you through challenging times. Get in touch on 0800 272 442 or at craigsip.com.

Disclaimer: This article is general in nature and is not financial advice. It does not take into account your financial situation, objectives, goals or risk tolerance. All investments involve risk and can go down as well as up. The Craigs Investment Partners Limited Financial Advice Provider Disclosure Statement can be viewed at craigsip.com/tcs

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