How Financial Advisors Can Help You Navigate Market Volatility
Having a lump sum of money is a rollercoaster—one minute you have it, the next thing you know, it’s gone. This is why we understand why some people are wary to invest in something they don’t know in the first place, because it may seem like your money is growing, but it feels like it’s disappearing in the next. If you feel like you’re in this situation of market volatility, know that it’s not you, but the unpredictability of financial markets. So in times like these, financial advisors might be the best people to offer you clear guidance.
What Is Market Volatility?
Just like any other jargon, market volatility is when the value of your investment goes up and down because of the changes in the economy and even world events like the COVID-19 pandemic or the rise in interest rates. These make the stock market move wildly, making your investment move with that tide too.
Why Does Market Volatility Matter to Everyday Australians?
If you’ve invested in something that is not a part of your disposable budget, then you might be frustrated and stressed right now with what’s happening to your hard-earned income. These market swings will keep you from your original goals, especially if you are approaching retirement or have a deadline or schedule for your investment.
How Financial Advisors Help Navigate Market Volatility
Providing a clear investment strategy. People usually act on impulse whenever there is a phenomenon that will affect them at any stage in their life, and this usually is a common mistake, especially when you are planning to invest in something. The good news is that financial advisors know how to help you control your losses by creating a plan to keep you on track.
Helping you stay focused on long-term goals. Although it’s easy to panic whenever news reports the market is crashing, history is proof that markets tend to naturally recover over time. For financial advisors, this is their time to remind you not to make rash decisions based on what you’ve heard now and instead focus on your bigger financial goals.
Reducing your risk through smart investments. It’s always a good idea to spread your investments across different types of assets, and your financial advisor will help you keep track of the assets you’ve put in so that if one drops in value, you might get to lose one but not everything at once.
Helping you avoid emotional investing. The usual thing that people do is to sell everything when the market drops, but it’s also tempting to put all your assets when the market is booming. Financial strategies do not work best with emotions, and what your financial advisor will say is that you should make decisions based on logic.
Adjusting your plan when needed. Lastly, while sticking to a plan is important, sometimes adjustments are necessary to take advantage of new opportunities while still ensuring your plan still fits your goals and preferences.
Stay calm, stay invested, stay on track.
Market changes are really scary, but as long as you have a financial advisor on your side, professional advice will always be within reach.