Tips to navigate market volatility

The best thing investors can do when markets are volatile is to stay invested.

Of course, that’s often easier said than done, especially when market commentators point to a market correction or when your portfolio is down for consecutive days or weeks.

For those new to investing, particularly those who jumped into the market when shares were booming last year, the recent market turbulence feels something like a rude awakening.

In times like these however, it’s useful to remember a few grounding investment principles that can get you through the good and the not-so-good.

Tips to navigate market volatility

Stick to your plan

Before you invest your first dollar, new investors need to have well-defined investment goals and a realistic investment plan. This means understanding how much money you have to invest, how much you can contribute regularly, how comfortable you are if that money goes down in the short-term, and how long you have to reach your desired outcome.

It’s easier to stick to a plan if you’ve got one written down.

Investors who fare best are the ones who don’t regularly tinker with their portfolio and are in it for the long-haul.

A good example of this is that during the COVID crash in March 2020, investors who stuck to their plan and stayed invested were able to reap the benefits of a swift market recovery. Those who cashed out at market lows lost the opportunity to regain portfolio value when markets picked back up.

Tune out the noise

Social media is rife these days with market commentary, stock predictions and portfolio strategies. Each corner of the internet will espouse a different investment philosophy, and while this might make for interesting debate, it can also be a little overwhelming for new investors.

In times like these, it’s not about disengaging from market information altogether, but rather about choosing what to listen to.

Investing can be emotionally charged at times which can lead to investors making impulsive decisions. So, when you’re struggling to decide who and what to listen to, first examine the source for credibility and bias, and then consider if the information is relevant before you take action (if any at all).

Remember, what might work for one investor may not work for the next as there’s a multitude of individual considerations (i.e. risk tolerance, investment confidence, timeframe, and objectives) that define an investor’s individual approach.

The best thing you can therefore do is to remind yourself of your investment plan, and the fact that no advice online has been tailored specifically to your circumstances.

Markets will consistently rise over the longer-term

For younger investors with a longer investment time frame, short-term market volatility is unlikely to materially impact long-term returns.

What might seem like a downward trend for markets right now is, importantly, only temporary.

Markets are cyclical, but history shows will rise over the longer term even when there’s been sharp falls in the past.

For example, a $10,000 investment in Australian shares 30 years ago would still have grown to $160,498 even with significant market downturns such as the Great Financial Crisis in 2007-2008 and the COVID-19 outbreak in 2020.

Vanguard’s annual Index Chart can serve as a good reminder to investors of the importance of perspective, and how sticking to a long-term investment plan, with diversification across a range of asset classes, allows you to grow your wealth even in the face of market crises and short-term volatility.

If the current market volatility has you concerned, please don’t hesitate to give us a call on 03 9553 0271 to discuss your overall investment strategy.

Source: Vanguard February 2022

Reproduced with permission of Vanguard Investments Australia Ltd

Vanguard Investments Australia Ltd (ABN 72 072 881 086 / AFS Licence 227263) is the product issuer. We have not taken yours and your clients’ circumstances into account when preparing this material so it may not be applicable to the particular situation you are considering. You should consider your circumstances and our Product Disclosure Statement (PDS) or Prospectus before making any investment decision. You can access our PDS or Prospectus online or by calling us. This material was prepared in good faith and we accept no liability for any errors or omissions. Past performance is not an indication of future performance.

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Authorised Representative 298494
Interprac Financial Planning Pty Ltd 

Darryl Jopling

Senior Adviser

I have worked in the financial services industry since 1982 and as a Financial Adviser since 1999.

I have worked for large Financial Planning businesses, Membership based organisations and looked after the financial planning needs of clients within an Accounting Practice before starting my own business.

I am married, have 4 older children and a grandson and I am keen golfer with mixed results like many .

I have been through many of the strategies I talk with clients about myself and with my family.

I have been through the journey of seeing my parents move into Aged care and negotiated the difficulties and pitfalls of understanding the system for them and this gives me an excellent insight into what is required to assist families at this difficult time.

In a previous roll I used to run retirement seminars looking at Centrelink and Retirement Incomes and how to make these work for you. I have helped many of my clients with Aged Care advice when their parents needed to move into Nursing Homes. For many clients I assist them with superannuation, building wealth and protecting their loved ones with insurance.

I am supported by his, Licensee, Interprac Financial Planning’s in-house resources and ongoing technical, systems and training.

I am committed to understanding your needs and identifying strategies and products to help you achieve your goals.

My guiding principle as an Adviser is to design plans which help to provide my clients with clarity of purpose and the opportunity to build a solid financial foundation.
I will take the time to listen, explain things clearly and keep you informed throughout the advice process.

My experience is complemented by professional qualifications including:

  • Certified Financial PlannerTM Professional
  • Diploma of Financial Planning

At Choice Financial Advice we work with you along the way on life’s journey.

Whether you are getting married, starting a family, embarking on the trip of a lifetime, planning to enjoy your years after work or assisting elderly parents with Aged Care and Nursing Home placements, we can help.