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The Australian share market has fallen around 12% from its recent high in August this year. It’s human nature for us to worry about such falls, after all, as humans, we have evolved to worry. Studies show that we feel losses twice as much as gains, we are becoming less and less inclined to stop and smell the roses.
Firstly, I will admit, if you are invested in shares, it’s never nice to see the value of your portfolio worth less on paper. But remember, it’s just that, on paper. If you don’t sell, you don’t lose.
A 10% fall in the share market is not uncommon. Over the last 10 years, the sharemarket has had several 10% corrections, even with the overall market trending upwards over this period. If you can’t handle a 10% correction in the sharemarket, perhaps you need to ask yourself the question – Should I be invested in this asset class?
Volatility can be your friend in the form of a buying opportunity. Lower prices mean you can buy a company share at a lower price than it was yesterday. It sounds so simple, yet so many people fail to take action when market falls, as the fear sets in.
Think of the falling share price of a quality company like an item at the shops that you want to buy that is on sale. Think back to the Black Friday sales a few weeks ago. If an item that you have been wanting to buy was on sale (10% to 15% cheaper) would you be more inclined to purchase? Of course you would. The same rationale should apply to how you think about shares.
How does my view compare to yours? If you feel like you need a recalibration on your approach or want to know how to go about investing in uncertain times, it’s time to Book a Discovery Meeting with an Independent Hewison Private Wealth Financial Adviser.
Hewison Private Wealth is a Melbourne based independent financial planning firm. Our financial advisers are highly qualified wealth managers and specialise in self managed super funds (SMSF), financial planning, retirement planning advice and investment portfolio management. If you would like to speak to a financial adviser on how you can secure your financial future please contact us 03 8548 4800, email info@hewison.com.au or visit www.hewison.com.auPlease note: The advice provided above is general information only and individuals should seek specialised advice from a qualified financial advisor. The views in this blog are those of the individual and may not represent the general opinion of the firm. Please contact Hewison Private Wealth for more information.