Invest
Why investors should remain in the market
Are you worried about your financial future? An expert shares why smart investors needn’t be.
Why investors should remain in the market
Are you worried about your financial future? An expert shares why smart investors needn’t be.
A lack of information about the total impact COVID-19 will have on investors’ bottom line, as well as time in the market beating “timing the market”, has an asset manager believing investors should remain calm and invest.
In conversation with nestegg, co-founder and co-CEO of Six Park Asset Management Pat Garrett explained the lessons from COVID-19 following a decade of good times, with diversification still being key to strong returns.
“For example, in March, local and international equities markets went down from anywhere from 25 to 30 per cent.
“During that same time, bond ETFs, cash-yielding ETFs, infrastructure ETFs did not go down nearly as much. They went down, but not nearly as much, so a balanced portfolio does not go down as much,” Mr Garrett explained.
Mr Garrett believes investors who have set out medium to long-term investment plans need to stick to their guns despite falling markets in the short term.
“The data shows the right move for most people is to ride out these market storms.”
“There are caveats to that as people are losing jobs and having hits to salaries, their risk tolerance, risk appetite and investment horizon, as those things change investors should absolutely revisit the right investment strategy,” Mr Garrett said.
The investment adviser also highlighted the problem investors have when trying to time a market, which is why he said investors might be better off staying in the market.
“Here is where the problem can happen. If someone doesn’t need to sell to cash but they do it and think they will get back into the market when things are better.
“They need to get two things right, if that’s your action: when to get out at the right time and when to get back in at the right time.”
“Those are two very difficult things to get right on their own, let alone getting them both right.”
“What happens more time than not, people tend to sell when markets are down and buy when markets are up.”
“They tend to watch the markets go down, go down, and when it feels scary they will sell into cash to elevate that stress. So, in other words, they are selling near the bottom.”
“Then things start to get better and there is typically a sting that stays with the investor from the market volatility and they tend to wait to get back in until they have a level of confidence that things are back to usual.
“The recoveries tend to be short and sharp, and if you miss that part of it, then you’re most likely going to buy into the market at a higher price while not getting the benefits of dividends,” Mr Garrett concluded.
About the author
About the author
Stock market
Big 4 bank flags remediation hit
One of Australia’s big four banks is gearing up to pay another hundred-million-dollar fine, according to the company announcement. ...Read more
Stock market
What are the top 8 IPOs by trades?
Investors looking to outperform the market are continuing to look at initial public offering stocks despite recent market volatility. ...Read more
Stock market
Small caps predicted to outperform as economy recovers
Investors who shun small-cap stocks may miss out on valuable opportunities as the economy recovers from the COVID-19 downturn, an investment manager has warned. ...Read more
Stock market
What impact will the iPhone launch have on Apple’s share price?
On the eve of Apple’s next-generation iPhone, shares in the company rose sharply, with this rally likely to continue, an industry expert has said. ...Read more
Stock market
How Apple and Tesla are skewing financial performance
Investors are being swayed by a handful of strong growth stocks, which is skewing how they are outperforming value investing, new research has revealed. ...Read more
Stock market
The pros and cons of DIY investing
“Social trading” is being flagged as a very real issue now affecting the Australian stock market – especially as low-cost stock trade platforms gain popularity. ...Read more
Stock market
Where to find dividends in a low-rate environment
Australian investors who are income-focused are still able to find strong dividend-paying stocks, but the market is changing, an expert has said. ...Read more
Stock market
Did investors overreact to the COVID-19 pandemic?
The economic downturn has not hit many sectors of the economy as hard as first predicted, with the reporting season revealing that many sectors will recover quickly, an investment fund has revealed. ...Read more
Stock market
Big 4 bank flags remediation hit
One of Australia’s big four banks is gearing up to pay another hundred-million-dollar fine, according to the company announcement. ...Read more
Stock market
What are the top 8 IPOs by trades?
Investors looking to outperform the market are continuing to look at initial public offering stocks despite recent market volatility. ...Read more
Stock market
Small caps predicted to outperform as economy recovers
Investors who shun small-cap stocks may miss out on valuable opportunities as the economy recovers from the COVID-19 downturn, an investment manager has warned. ...Read more
Stock market
What impact will the iPhone launch have on Apple’s share price?
On the eve of Apple’s next-generation iPhone, shares in the company rose sharply, with this rally likely to continue, an industry expert has said. ...Read more
Stock market
How Apple and Tesla are skewing financial performance
Investors are being swayed by a handful of strong growth stocks, which is skewing how they are outperforming value investing, new research has revealed. ...Read more
Stock market
The pros and cons of DIY investing
“Social trading” is being flagged as a very real issue now affecting the Australian stock market – especially as low-cost stock trade platforms gain popularity. ...Read more
Stock market
Where to find dividends in a low-rate environment
Australian investors who are income-focused are still able to find strong dividend-paying stocks, but the market is changing, an expert has said. ...Read more
Stock market
Did investors overreact to the COVID-19 pandemic?
The economic downturn has not hit many sectors of the economy as hard as first predicted, with the reporting season revealing that many sectors will recover quickly, an investment fund has revealed. ...Read more
More articles
Website Notifications
Get notifications in real-time for staying up to date with content that matters to you.
