At the start of the new year, many of us are thinking about our investment portfolios and whether we need to make any changes for the year ahead. With global tensions and uncertainty in some markets set to continue this year, it’s a good time to remind our clients and our community of the core tenets of investing in uncertain times.
These principles play a central role in our wealth management approach – and they should in yours too.
During periods of uncertainty:
- Stick to the plan. Focus on your long-term goals. Our investment approach is focused on the long term and designed so your portfolio can ride out any downturns – including this one.
- Stay the course, despite how uncomfortable it may feel right now. It will prove to be the better option when looking back five years from now. Investors who stayed the course while equity markets declined in the depths of the COVID-19 pandemic in early 2020 have benefitted from one of the fastest market turnarounds with equity markets. Investors who sold equities during the downturn and waited until economies started to show recovery before buying back into the market missed a large part of the recovery.
- Maintain a buffer of safety. Holding a buffer of cash and term deposits has been a key strategy to provide a cushion against market downturns and to protect capital.
- Take advantage of the weakness. Market downturns provide buying opportunities to invest in long-term, quality investments.
- Focus on quality investments. Invest in companies that generate stable cash flows to support distributions that are not connected to the movements in asset prices, and partner with fund managers who share the same investment philosophy and objectives.
- Diversification is key. Diversify across asset classes, industries, sectors and geographies.
- Regularly rebalance your portfolio back to your risk profile. This ensures that the portfolio is not exposed to unwanted risks and also locks in profits.
- Remain calm and speak to your Apt adviser. It is important that you speak to your Apt adviser before making any financial moves. Your adviser understands your long- and short-term goals and will have been planning for these types of scenarios already, so they are best placed to explain any impact and discuss the best options and opportunities for you personally.
If you are an Apt Wealth client, you’ll already be benefitting from the above in your investment approach and can speak to your adviser for advice or support whenever you wish.
If you aren’t an Apt Wealth client, book a free consultation to find out how our experienced advisers, backed by our expert in-house investment team, can help you reach your financial goals in 2024 and beyond.
General Advice warning
The information provided in this blog does not constitute financial product advice or a recommendation to purchase a particular product. The information is of a general nature only and does not take into account your individual objectives, financial situation or needs. It should not be used, relied upon, or treated as a substitute for specific professional advice. Apt Wealth Partners Pty Ltd is not a registered Tax Agent. You should consider your individual situation and seek tax advice from a registered tax agent before making any decision based on the content of this document. Apt Wealth Partners (AFSL and ACL 436121 ABN 49 159 583 847) recommends that you obtain professional advice before making any decision in relation to your particular requirements or circumstances.
