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May 29th, 2012
Due to the prolonged period of investment market volatility that we are currently experiencing, an article with a heading like this might seem like old news. However with renewed uncertainty coming out of Europe, the possible knock-on effect into China’s manufacturing and our resources boom, heightened levels of fear in the market pushed all major share indices lower last week.
The successful investor is one who can see past the short term fluctuations and stick to a long term plan. Research has shown time and time again that at the point where you just can’t handle any further reductions in value, it is fear that gets the better of you and promotes the sell order to be placed.
In this day and age, vastly uneducated investors have their fingers on the trigger via the likes of E-Trade and CommSec accounts, allowing major financial decisions to be made from the comfort of your living room with no need to have a ‘filtering’ discussion with your share broker or financial adviser. In the past these professional had a much better chance of kerbing runaway emotions of their investors before the market noise and short term fluctuations took too great a hold of investment decisions.
This removal of the emotions surrounding stock selection and ‘headline effect’ in the press is an important part of the rationale behind MEDIQ’s use of exchange traded funds. These investments are freely traded and provide you with exposure to broad asset classes, allowing you to maintain liquidity and a broad base of diversification whilst only holding a handful of assets in the portfolio.
A quality MEDIQ investment plan will also address the risk management required to roll over short term volatility in the market; meaning an investor should never be forced to sell in a falling market with time horizons for capital out of investment markets set for well into the future.
When it comes to maintaining a level head in volatile times, the MEDIQ approach allows our clients to focus on the long term objectives and high level asset allocation. This is a much better use of your energy as an investor when compared to the short term fluctuations and press headlines.