Market drops - cause for concern?

12 October 2018

You may have heard that global share markets have fallen sharply over the last few days and be naturally wondering what this means and what you should do.

The first thing to know is that markets will do this from time to time and that this is the second time they have done so this year.  Back in February they also dropped sharply when Donald Trump first threatened trade wars with China. They recovered well after that, because it was soon realised that world economic growth and company profitability would not be significantly affected – importantly, this remains the case today.

The next thing to do is avoid panicking into any rash decision to suddenly change what fund you are currently in. We know this can be easier said than done. So this might be good time to check in with our online risk profile questionnaire, to double check that the fund you are in is still the right one for your time horizon and risk appetite.  You could then use the results as the basis of a discussion with your financial adviser – they can help you with the results of the risk profile and talk through anything else that might be on your mind. We'll be keeping advisers well-informed about any market developments. If you don’t currently have a financial adviser, we can recommend one for you.

Market movements like we have seen are a bit unsettling and unpredictable in the short term, but they are not unusual.  What is more predictable though, is the superior performance of markets over the long term. So, if you are a long-term investor in KiwiSaver, staying with markets through thick and thin has always been the best thing to do.

Read the Thinkmoney article here

David Beattie

By David Beattie

Principal - Booster