Whilst there has been plenty of commentary on the impacts to global markets of the CoronaVirus (see our prior communication titled “The coronavirus is not the only risk to consider this this year” investment markets are still volatile.
At the time of writing this article the Dow Jones has closed 7.79% down for the day and the ASX is likely to follow suit when it opens. Our view remains unchanged, that now is not the time to try and time the markets.
For our advised clients (those paying an advice fee) if you have an income focus your portfolios have been structured to ensure your income needs are met (often for more than 18 to 24 months) and if you have a wealth accumulation focus your portfolios have been diversified relative to your risk profile to ensure any downside volatility can be minimised.
A typical Balanced portfolio will strategically have a benchmark exposure of 16% to Australian shares and 23% to international shares with downside protection typical provided by cash and fixed interest holdings.
Whilst there would be no portfolio immune to market volatility (unless you are fully invested in cash and therefore you run the low yield and inflation risks) it’s important to remember that corrections are part of the investment process which is why we take the time to ensure you can pass the “sleep at night test”.
Understanding your tolerance to investment risk is crucial in this process so at times like these it’s best to remember that share markets will eventually “climb the wall of worry”, as they have in the past, and that any longer term wealth strategy requires some exposure to share markets.
So whilst we understand you may well be feeling uncomfortable it’s important to take the longer term view. That said we do understand at these times you may well need to just speak with someone about your concerns, so please feel free to contact us for a chat – we’d be happy to help