Four important steps to take in times of market volatility

The global stock markets are currently volatile and many people are asking their advisors what steps do they need to take. So, what should you be considering doing, if anything?

I have noted 4 key factors that all clients and advisors need to adhere too at times like this.

1: do not panic. One of the main reasons why portfolios achieve greater investment returns over the long-term is because investors are being rewarded for tolerating volatility and staying invested. If there was no volatility, then there wouldn’t be long-term returns over deposits and bonds. Those that stay invested traditionally receive a ‘premium’ over low risk asset classes by merely staying invested over the longer-term.

I also advise clients not to let emotions interfere with your rational way of thinking. How often have you made a bad decision based on emotions and later regretted it? In contrast, how often have you made sound, prudent decisions based on careful thought and analysis and were later rewarded for staying the course?

2: make sure you have a well-diversified portfolio spread across various regions and sectors. This means you should be exposed to (i) a variety of equities (ii) different geographic regions, such as the US, Europe, Asia, etc, and (iii) if possible, different asset classes besides just stocks and bonds, such as real estate, commodities and alternative asset classes.

Why do you need exposure across the various asset classes, regions and sectors? Because when markets are volatile, you never know what asset will go up in value and what asset will go down in value, however over the long-term, a well-diversified portfolio should increase in value and provide you with the returns commensurate with your chosen risk portfolio.

3: critically evaluate and review your portfolio with your advisor now. Because we have so many other things to worry about (such as jobs, family etc.), a detailed portfolio review can be pushed down the list of priorities. But when markets are volatile like they are now, a review can serve as a useful reminder to make sure your portfolio is appropriate for your current age, your objectives and your current circumstances.

I am meeting all of my clients currently to provide them with updates on the current markets, discussing what options are available and what, if any, changes need to be made to their current portfolio’s. Regular reviews are key to your portfolio’s success over the long-term.

4: lastly, don’t rush to sell at low prices and do not try to time the market. Many of my clients are happy to invest for the longer term in the current market conditions, taking into account their long-term objectives, euro cost averaging into the market and making sure that they have well-diversified portfolios’ spread across many assets, managers, regions and sectors.

As mentioned previously, over the long-run, investors are usually rewarded for withstanding volatility and staying the course.

Decisions about our financial future are among the most important we’ll ever make. Independent financial advice goes well beyond products and where and how to invest. A Certified Financial Planner will help you make well-informed choices for building wealth and protecting your future. A planner works closely with clients, building a deep understanding of their personal circumstances, goals and aspirations and helping plot a way through the risks and opportunities that lie ahead.

If you would like to discuss your financial planning requirements, please do not hesitate to contact Heritage Wealth Management at 083 466 2040 or email