Financial Planning

These Are Volatile Times, I’m Not Sure What to Do!

By November 13, 2018 No Comments

Financial markets are currently experiencing a considerable amount of volatility, with Australian and International Shares losing ground, gaining ground then losing it again. These losses have been fuelled, for the most part, by political and fiscal activity in the United States.

We have some interesting times ahead as the world decides how to react to these influences, with most commentators predicting investment losses in the near future.

It’s natural for investors to experience some level of anxiety around the value of their portfolios when the financial markets are volatile, so what can you do to combat this anxiety?

Let’s look closer at what you can control:

  • Ensure you are comfortable with your asset allocation
  • Remember that regular contributions (such as Super contributions) invested in times where asset prices are lower means you benefit in the long term
  • Stay disciplined – don’t try to time your investments in the market
  • Consider assistance from qualified advisers!

Asset Allocation

  • A diversified Asset allocation strategy seeks to divide the total investible value across major asset categories. Each category contains assets that have different characteristics and often provide the investor with different outcomes. The amount attributed to each asset class will depend on the needs and attitude of each portfolio and each investor.
  • Understanding what you’d like to achieve from your portfolio is the key. If you’re saving for something you’d like to purchase in 3 years’ time you’ll have a much higher allocation to fixed interest and cash, assets that typically provide consistent returns, albeit with modest performance. If, however, you’re a 35-year-old saving via Superannuation for retirement, you are likely to consider a larger allocation to shares – assets that typically rise and fall but provide greater opportunity for long-term growth.
  • Ensuring that your portfolio has an appropriate allocation to Australian and International Shares, Property, Infrastructure, Fixed Interest and Cash should ensure that you limit negative performance.

Market Timing

  • Have you heard the mantra:  Time in the market as opposed to Timing the market?
  • Timing the market involves guesswork, as to when the ‘bottom’ of the market occurs. As investors we’d love to have that crystal ball – the reality is you’ll never guess the lowest price point with any accuracy. As Financial Planners the most common mistake we see is people thinking they’ve found the bottom of a particular share price only to see it drop even further. We believe, and industry research supports the fact that in the long term, you’re much better off investing in regular intervals, when the market is ‘cheap’ and when the market is ‘expensive’.

Consider the potential for tax-losses

If you hold investments that you’d like to sell, consider locking in a tax loss.

If you’ve realised a loss from the disposal of investments, such as shares, and your loss is a capital loss (that is, made as a result of holding shares as an investor)

  • it may be offset against current capital gains
  • it may be carried forward to offset against future capital gains
  • it may not be offset against your income including income from other sources
  • it may not be converted to revenue losses in future years, even if you haven’t been able to offset it against a capital gain

When considering this as a strategy, always seek the assistance of our tax experts as this can be complex and have implications across several financial years.

Stick to the plan

  • Any financial plan should consider periods of negative performance. Ensure your strategy takes a conservative approach to annual returns to keep it real.
  • Don’t panic, don’t make substantial changes to the assets you hold – performance will return, and dividends will be paid in the meantime.
  • If you’re the type who prefers to oversee your own portfolio and performance on a daily or weekly basis consider taking a step back and checking the balances once a month instead.

Ask for help

As financial planners we help you understand your lifestyle and financial goals and ensure you have a clear understanding of how you’re travelling at any given moment.   We put you back in control.

With clarity comes a sense of purpose, helping you prioritise what’s most important for your future. Now you can see where you are headed.  Decide what prosperity should look like to you and make small changes now that will have a big impact later.

You deserve to realise your true financial potential. There’s no time like the present to start making your hard-earned money work smarter and harder for you

Our investment solutions are designed with diversification and simplicity in mind, delivering great performance whilst minimising investment costs.

It’s this belief that has driven us since we started operating in 2010.

In today’s busy world, financial freedom can seem a lifetime away. Yet by simply creating a plan and taking a holistic approach to your finances, you’ll be amazed by the difference it can make.

Our team can be reached on 1300 925 081 or via email: info@cxcfp.com.au

You’ll wonder why you didn’t do this years ago!

If you’re ready to take control of your financial future, we’re ready to assist. With access to in-house experts in property, mortgages, tax and accounting, our holistic approach has your financial well-being covered. We’ll help you define your goals and prioritise what’s most important for your future.

If you would like to take control and activate your prosperity, contact our team on 1300 925 081 or info@cxcfp.com.au for a no obligation and confidential discussion.