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Worrying about sharemarket volatility is like a rocking chair… it might give you something to do, but it’s not going to get you anywhere.
Most of the time, when share markets are moving up and down there are 2 main reasons this can cause stress:
  1. A lack of understanding as to why this is happening.
  2. Not knowing how this is going to affect your situation.

The first issue here is an interesting one. For most people, the biggest investment decision they make will be buying a house.  If you have $300,000 to purchase this, you would spend countless hours comparing options, getting educated on the subject, and seeking out experts to discuss this decision with.  However a lot of people have at least this much money sitting in their superannuation fund… and have no idea where this money is invested. Because of this, when their super balance goes up and down this can cause a lot of anxiety as there has been no education about why this is happening.

The second issue is more of a practical issue.  Whenever we turn on the news and see a reporter saying ‘the ASX200 steadied at 5,300 points today’ or ‘mining shares rallied off the back of good news from China’, the real question shouldn’t be ‘what will happen tomorrow’, it should be ‘how does this affect my ability to retire comfortably, and stay comfortably retired?’

Here’s something we have noticed:  Every successful investor ever was acting as part of a plan, every unsuccessful investor ever was reacting to the market.

So the real question that needs to be answered to be financially comfortable isn’t ‘What is the share market doing?’… it’s ‘what is my retirement plan?’.

Instead of asking ‘Is now a good time to invest?’… ask ‘How much money will I need to retire?’.

Instead of asking ‘What about China?… ask ‘What can I do to make sure I have enough money to retire?’

Instead of asking ‘will the Australian share market go up or down over the next 6 months?’… ask ‘what mix of assets do I need to make sure that I can safely draw the retirement income I need over the next 30 years?’.

If you know the answers to these questions, it’s a lot easier to feel confident that you’re making the right decisions in stressful times, as I’m sure our clients would agree.  If you don’t know the answers to these questions, give us a call if you want to sit down and get some help from us to figure these out.  We’d be happy to help, and there’s no cost or obligation to you for doing so.

Written by Dallas Davison.
Published by Dallas Davison. November 1, 2015