5 Steps to Navigating a Volatile Investment Market
What is a Volatile Investment Market?
You may have heard the market described as being volatile, and you’re probably wondering what that actually means.
Volatility is a measure of the rate and magnitude of price changes over time. If the price fluctuates rapidly in a short period, hitting new highs and lows, it is said to have high volatility. If the price moves higher or lower more slowly, or stays relatively stable, it is said to have low volatility.
A volatile investment market is an investment term that describes when a market or security experiences periods of unpredictable, and sometimes sharp, price movements.
Photo by Tim Mossholder on Unsplash
Why Do Volatile Markets Happen?
There are a variety of reasons why volatile markets happen. The three most common reasons are political and economic factors, industry and sector factors, and company performance.
Political and economic factors can include changes in government policy, interest rates, unemployment rates, and inflation rates. Industry and sector factors can include changes in technology, consumer trends, and competitive landscape. Company performance can include earnings reports, management changes, and news events.
5 Steps to Navigating a Volatile Investment Market
Photo by Lindsay Henwood
When saving for the future, it’s important to have both short-term and long-term goals in mind.
This will help you stay disciplined when the markets are volatile, which they are bound to be at some point or another.
Here are five steps to help you navigate a volatile investment market:
1. Have a plan and stay diversified.
When you have a plan and are diversified, you are more likely to stick to your investing goals. This is because you will have a clear idea of what you are doing and why you are doing it.
2. Stay disciplined.
It can be difficult to stay disciplined when the markets are volatile. However, if you have a plan and are diversified, you are more likely to stick to your goals.
3. Don’t even try to time the market.
Trying to time the market is a losing proposition. Instead, focus on your long-term goals and stay diversified.
4. Be prepared for bumps in the road.
There will be times when the markets are volatile and your investments will lose value. However, if you are diversified and have a long-term perspective, you will be better able to weather these bumps.
5. Rebalance your portfolio.
Rebalancing your portfolio is important when the markets are volatile. This helps you maintain your desired level of risk and keep your portfolio diversified.
Important: The information and opinions in this article are for general information purposes only. They should not be relied on as professional financial advice. Readers should seek unbiased financial advice that is customised to their specific financial objectives, situations & needs. This advertisement or publication has not been reviewed by the Monetary Authority of Singapore.
Published By:
Eng Wei Lee Valerie
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