In times of market volatility, it is important to review your investment portfolio to ensure it still meets your personal circumstances, risk appetite and your long-term financial goals.

Certainly, as we’ve discussed in our previous article, no matter where you are on your path to retirement, it is important to keep a level head when deciding on whether to retain, review, refine or remove your investments.  

In challenging economic times, being strategic about your investments can reap rewards in the long run. At Tribel, our wealth management plan will map out your long term goals but take into account the shorter term market changes, and our advisers are experienced in selecting the right investment vehicle and asset class mix with your goals and risk appetite in mind.

For the best part of three decades, inflation has hardly factored into the equation when it comes to financial planning. Nevertheless, inflation is something that all markets have dealt with over time, and it is important to keep the cyclical nature of economic markets in mind and remain focused on your long-term investment goals.

When considering your investment strategy, there are a few rules of thumb to consider:

• Ask an expert – The right advice can help grow your investments.
• Don’t put all your eggs in one basket – Diversification across asset classes reduces risk in volatile markets.
• There will be ups and downs – Regardless of market up and downs, a considered long term investment strategy will deliver on intended objectives.

Direct vs Managed and Active vs Passive

At Tribel, we ensure your investment strategy starts with your specific situation. Your stage of life, risk appetite and how much you want to be involved in the ongoing maintenance of your investment portfolio. Levels of investor involvement will differ across the asset classes and whether passive or active investments are selected.

For some, being hands on in an investment portfolio is important, with the resultant time commitment this entailed. Rest assured, there is a lot to learn and some great online, self-guided resources available including the ComSec Learn which provides self-guided tuition on managing your investments, or a financial adviser can guide you through the process.

Having a financial adviser manage your portfolio may be a better option, especially in times of volatility. Being guided by an expert financial adviser  can reduce the stress and anxiety of watching your investment fluctuate over time.

Your adviser can provide you with a range of investment options that are active or passive.

Actively managed investment

An active investment fund requires more hands-on management by the fund manager. They will make more frequent investment decisions and transactions on your behalf with the aim of achieving your set objectives regardless of market volatility.

Passively managed investment

A passive investment is one where you essentially buy and hold for the long term and requires very little effort on your part. Passive funds track a specific market (such as a the ASX50, ASX 100, ASX200) and attempt to match the benchmarked returns.

A good example of this type of fund is Exchange Traded Funds (ETFs) which have become increasingly popular due to their consistent performance in tracking the overall market.

Investing for regular income or capital growth?

As part of your goal setting, your adviser will discuss your overall financial situation in relation to your income. Investing can generate regular income (for example through rental return or dividends) or can be used to generate capital growth (for example increases in property value or share value).

Building an investment portfolio to generate income has been difficult during the record low interest rates.

Growth investing on the other hand, aims to increase wealth through capital appreciation where the gains are received when the asset is sold.

The income investment strategy is usually more suited to those who are close to retirement and are looking to replace their regular working income with their investment income.

A growth investment strategy is usually suited to high income earners, who want to build their assets for the future.

Diversification is the key in a volatile market

In the face of economic uncertainty, a diversified investment portfolio across asset classes can assist in strengthening and overall position over time.

Ensuring you have diversification of asset classes, market sectors, investment funds and markets within your portfolio is often suitable for those with a lower risk appetite and hence is often referred to as a defensive investment strategy.

In answering the question – is my investment strategy right for these economic times, our short answer is – review, evaluate and monitor.

Review, evaluate and monitor your investment strategies with Tribel Advisory

Having regular reviews of your investment portfolio should be part and parcel of your investment strategy. Most importantly, an advisor will help you base your investment decisions on science rather than emotion which is even more vital during times of uncertainty.

Contact our team to discuss your investment situation.