Let’s face it, market volatility makes us all nervous, and we fear losing money. Still, the ultimate question is whether we should panic and switch to funds that are performing better or stay the course until the markets even out again.

Knowing when to cut your losses or stay the course is difficult and will depend on your financial circumstances and type of investment. It is advised to consult with your financial advisor before making any major decisions that could affect your wealth.

First and foremost, the most important question is to ask what your investment is for and what is the intended term of the investment, e.g. for retirement, for a rainy day, for wealth building, or perhaps even for children’s education. 

Short-term investing – These are generally investments that are done for shorter-term goals and could go up to about 5-7 years. Depending on the type of investment, the risk on these tends to be lower, and they are invested in more stable funds as market volatility may affect the returns. This would include more exposure to bonds and cash.

There are times, however, when higher-risk short-term investments that offer higher returns are possible. These could include structured products and trading. You need to be knowledgeable about these products and only try these under the expert advice of your financial advisor.

Long-Term Investments These are investments that allow you to grow your portfolio and meet goals several years—or even decades—in the future. This often allows for a riskier investment as the fund will ride out the volatility and storms in the markets over the long term. This could include increasing the equities % of the investment. The risk is higher, but the returns could also be higher.

It is important that your investment beats inflation and earns interest so that your money can grow and accumulate compound interest with time.

Your advisor will regularly review your portfolio and any rebalancing if needed. This should keep your wealth building on track. Remember that besides your financial advisor, fund managers look at market trends and adjust the composition of your funds to achieve the best returns as well. 

Remember that even experts cannot time or predict how the markets will perform, so keeping your money invested over the long term is one of the best ways to ride out the ups and downs in the market. 

Please note the above is for educational purposes only and does not constitute advice. You should always contact your deVere advisor for a personal consultation.

* No liability can be accepted for any actions taken or refrained from being taken as a result of reading the above.