Over recent months it seems that news of one financial crisis after another has been making headlines. As a result of the US housing slump and related problems there has been a flow on effect for financial markets throughout the world. The March quarter of 2008 was the worst for shares since the share market crash of 1987. You may wonder what this means for you.
Like many investors, recent market volatility may have resulted in negative returns on your investment for the first time in some years. Even if you selected a diversified fund to help reduce investment risk, your investment is likely to have been affected.
During times of market volatility it helps to keep the following 3 key things in mind:
No one likes to see their investment portfolio fall in value. Unfortunately though, negative returns are the price we have to pay for accessing the higher returns that growth assets provide over time. While switching to cash may make sleeping at night easier after (and during) periods of weakness, it's likely to result in lower long term returns. The key for investors is to remember that market volatility is normal and they should not be thrown off their long term strategy by it.
View AMP Video on Market Volatility
Want to know more?
If you need advice on your personal situation or your situation has changed, we recommend you seek advice from a financial planner. If you don’t already have a planner, click here to find one.
Read our Frequently Asked Questions on Market Volatility
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The Australian Bureau of Statistics for numbers on topics such as inflation and economic growth.
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