IT'S easy to invest when financial markets are running smoothly, but when they fall your confidence can be sorely tested.
More uncertainty in investment markets means more volatility and a need to review your investment strategy.
Start with the basics. Focus on your goals and objectives. If you have long-term investment goals,
remind yourself not to get too distracted with short-term changes in the market.
Reversing your strategy will cause you to lose value and lose time - both key ingredients for achieving your goals.
Review your attitude towards risk and reassess whether your investment strategy is a good fit for your risk tolerance.
When things are going well in investment markets it is easy to take on more risk than you should.
Stay diversified. Markets can change quickly, and moving all your investments into one asset class might work in the short term, but it means you are taking on more risk. Don't sell in a panic or you will crystallise any paper losses. Selling up and putting all your money into very safe investments will lower your return.
Evaluate all the options you have. This might mean getting more information from an expert.
Make sure that any advice you get is from someone with a balanced or independent point of view who can point out the downsides as well as the advantages of different investment options. Confident investors have a long-term plan that they stick to, they do their research, they aren't swayed by emotions such as fear or greed, and they are successful at building wealth.
Liz Koh is a financial adviser, based in Paraparaumu. Her disclosure statement can be obtained free of charge by calling: 0800 273 847. Author of Your Money Personality; Unlock the Secret to a Rich and Happy Life. She can be contacted on email: liz.koh@moneymax.co.nz or view: www.moneymax.co.nz.
