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I'm In It For the Long Haul

Think of long-term investing like a marathon, not a sprint. It’s about keeping up a steady pace that you can ultimately benefit from. The benefits of a long-term approach to investing include maximizing wealth, preventing costly mistakes and lowering risk. Remember, that as a long-term investor you shouldn’t panic when your investments experience a short-term drop in value. Nor should you jump for joy when your investments experience a sudden increase in value in the short term.

Don’t forget to review your investment objectives on an annual basis. And remember what Warren Buffet said: “Someone’s sitting in the shade today because someone planted a tree a long time ago.”

How to Ride Out Market Volatility

Here are some helpful tips on how you can weather the ups and downs of the financial markets:

Be patient and don’t panic, remember that markets are cyclical
Up turns and down turns are a normal part of financial markets. The best market days are known to be preceded by market downturns. And by staying invested in those times rather than getting out of the market, you’re able to take advantage of a market recovery. This presents a great investment opportunity for long-term investors.

Don’t try to time the market, instead invest regularly with ASP
The best way to ride out market volatility in style is to set up an Automatic Savings Program (ASP) on your investment. An ASP gives you the benefit of Dollar Cost Averaging, a strategy recommended by many because it averages out the cost of your mutual fund units and helps you to buy more units when prices are low and fewer units when prices are high.

Down markets are a good time to buy
When markets are down, investment prices go down. For example, mutual fund unit prices are now lower due to a downturn in the markets. It’s good to buy more units at a lower price. Remember the famous investing mantra “buy low and sell high”? Investing in a down market presents an opportunity of getting a very good deal when buying investments.

Diversify to reduce risk
Diversification is an investment strategy that spreads your investments around so that the movement of a particular investment, industry sector or geographic region shouldn’t have a significant impact on your portfolio. By spreading your investments around, you’re helping to reduce risk. Our Streetwise Fund is a well-diversified fund with investments spread across different asset classes, industry sectors and geographic regions.

Update your risk profile
Make sure that your risk profile hasn’t changed recently as a result of the market volatility. You can take an Investor Profile questionnaire online or give us a call for a quick check up. It won’t hurt a bit.

Think long-term
History has shown that investors who have soundly diversified their portfolios and are prepared to ride out the peaks and valleys in stock market values will benefit in the long term. When tracking the activities of your investments, you should look at the big picture. Stay even-keeled but be confident in the quality of your investments rather than nervous about the inevitable volatility of the short term.

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