Market volatility relates to the tendency for the value of your investments to fluctuate over time. It can apply to either the market price or the income of a particular investment. The greater the volatility of an investment, the greater the potential fluctuations in returns.
To understand your risk comfort level, you should consider the volatility of returns associated with differing investment types. For example, sharemarket volatility can be high. Markets can be affected by sentiment as well as economic and business fundamentals and these are reflected in the sharemarket.
By comparison, changes in real property values usually take place more gradually. This is because, unlike liquid assets like shares, real property cannot be bought or sold in a day.
However, property income can be volatile as a result of change of interest rates, vacancies, tenancy problems and the unpredictability of maintenance costs.
Short-term Market Volatility is nothing new
Most of us like to stay up-to-date with how the markets are going. However, when markets are volatile they hit the headlines, and there always seems to be more stories compared to when markets are performing well.
While it’s good to be knowledgeable about what’s going on, when thinking about your investments, it helps to remember that market down times are a normal part of the market cycle.
With a low government debt of 24 per cent of our economic output, strong growth, low unemployment, and record demand for our exports, the Australian economy is very well placed to absorb global shocks.
Australia’s AAA credit rating is solid. Even though the Australian market volatility can be quiet versatile, its always wise to get a expert adviser working for you.
And, while it’s natural to feel unsettled during uncertain times, we have seen it all before. History is littered with examples of market corrections (falls of more than 10%) and in every case, the market has bounced back and continued on an upward trend.
Getting Investment Advice is the best thing you could action today in relation to when we experience market volatility. Enquire today or simply leave your details below..