The last few weeks – and especially the last few days – have seen an extraordinary level of instability and volatility in global financial markets, particularly in equities and some emerging market (EM) currencies.
Much of what has taken place in global financial markets over recent days and weeks has been driven by fresh concerns over the pace of growth in China and further volatility on Chinese equity markets.
Chinese policy makers appear to be prioritising the slowing economy and stabilising the currency over protecting the equity market – as a result of the apparent lack of immediate policy action on the latter, the Chinese equity market continues to fall sharply and this has led to falls in global equity markets. There have been no other signs of a broader global economic slowdown.
It is important to note, apart from China, there has been no signs of renewed economic weakness in the US, Europe or Australia.
What does the market volatility mean for your investments?
It’s time in the market, not timing the market, that’s important. So if you can ride out the volatile times, you could have a smoother return over the long term. Diversifying your investments can help to defend against volatility and reduce risks. You can diversify across a variety of investment options.
If you’re in retirement or nearing retirement, it is understandable you want to protect your investments. After all, your investment returns play a vital role in funding your retirement. In times of volatility it’s easy to react emotionally. But now is the time to keep a level head and stick to your long term investment strategy.
For a full review of the current situation, read our assessment here.
Of course if you retain serious concerns about your strategy in light of prevailing events please contact your adviser to discuss.
This document has been prepared by MSI Taylor Wealth Management AFSL 231138 (Financial Wisdom) based on our understanding of current regulatory requirements and laws as at 03 September 2015. This document is not advice and provides information only. It does not take into account your individual objectives, financial situation or needs. You should carefully assess whether the information is appropriate for you and consider talking to us before making any investment decision.
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