{"id":1462,"date":"2023-10-26T10:16:24","date_gmt":"2023-10-26T10:16:24","guid":{"rendered":"https:\/\/www.innov8fs.co.za\/blog\/?p=1462"},"modified":"2026-03-18T11:46:25","modified_gmt":"2026-03-18T11:46:25","slug":"dont-be-spooked-by-market-volatility","status":"publish","type":"post","link":"https:\/\/www.innov8fs.co.za\/blog\/2023\/10\/26\/dont-be-spooked-by-market-volatility\/","title":{"rendered":"Don\u2019t be spooked by market volatility"},"content":{"rendered":"

\"\"<\/p>\n

If you kept an eye on the Volatility Index in recent months, you may be concerned about the direction of your investments. The bond market, especially, has experienced turbulent times thanks to renewed tension in the Middle East.<\/p>\n

This index is often referred to as the \u2018fear and greed gauge\u2019 because it reflects the mood in the market \u2013 rising when stock prices fall and dropping when prices rise.<\/p>\n

For retail investors, this volatility is more than a metric used by market insiders: it is a reality that impacts their finances. In extreme cases, some have seen their portfolios take a hit and have responded with outright panic.<\/p>\n

Historically and especially over longer periods of time \u2018fear\u2019 in that moment is usually a small blip on your longer-term financial plan.<\/p>\n

\"\"<\/p>\n

The above graph of the S&P 500 illustrates multiple reasons for investors to have sold over more than a decade and at the same time the benefit of having remained invested and ignoring the short-term volatility.<\/em><\/p>\n

Headlines and uncertainty cause panic and fear, which when looking back over longer periods of time seem less significant. Emotion and sentiment are huge drivers of the \u2018fear and greed\u2019 index.<\/p>\n

Seasoned investors and advisors are aware that uncontrollable events are reasonable and acceptable risks that influence market participants\u2019 sentiment.<\/p>\n

Behavioural science and in particular within the financial decision-making process has become far more important to advisors when guiding their clients to avoid making mistakes which can cost them dearly, especially impulsive decisions driven by either \u2018fear or greed\u2019.<\/p>\n

From my own experience, over more than 20 years of advising clients, I am aware of my own and my client\u2019s biases which impact decision-making, especially in a \u2018fear\u2019 driven event which inevitably makes us uncomfortable. It\u2019s a human condition.<\/p>\n

However, with experience comes wisdom and a deeper understanding of where to focus in times of uncertainty or volatility which impacts our emotions and sentiment towards our investment-related decisions.<\/p>\n

And this applies to any life situation, including personal relationships with friends, colleagues or family. Everyone can relate to regretting something said in the heat of the moment as emotion overrules sensibility.<\/p>\n

So, what can you do to protect your investments in these turbulent times? Panic isn\u2019t a strategy, so rather try to get a better perspective when markets get choppy. To help you do that, here are some strategies to consider.<\/p>\n

Expect and accept volatility<\/h3>\n

Market volatility is a given. Rather than attempting to time the market, focus on time in the market.<\/p>\n

Historical data suggests that markets have consistently experienced steady gains over time.<\/p>\n

Don\u2019t abandon your plan<\/h3>\n

Understanding your financial situation is key. A sudden market drop can have different implications depending on your stage in life, your financial goals and underlying asset allocation.<\/p>\n

It\u2019s essential to consult with your financial professional to minimise the impact of any impulsive decisions.<\/p>\n

Stay invested<\/h3>\n

Short-term losses can be nerve-wracking, but making decisions based on emotions can be costly. The key to living with market volatility is focusing on long-term results.<\/p>\n

Staying the course can be challenging, but it can also create opportunities.<\/p>\n

Stay diversified<\/h3>\n

Diversification is a basic principle in investing. Your portfolio may need to evolve as markets change.<\/p>\n

Times of volatility offer a great opportunity to re-evaluate and if necessary, rebalance your asset allocation.<\/p>\n

Take an active approach to risk management<\/h3>\n

Being passive in the face of volatile markets isn\u2019t advisable. This is your money and your future.<\/p>\n

Knowing your tolerance for risk is as important as being comfortable with your investment plan.<\/p>\n

Talk to your financial advisor<\/h3>\n

If market volatility concerns you, don\u2019t hesitate to seek professional advice.<\/p>\n

A financial advisor can help you review your financial plan and determine any steps you may need to take.<\/p>\n

Stick to your long-term goals<\/h3>\n

Review your financial plan and determine if you\u2019re still comfortable with it. Base decisions on your long-term goals and ignore daily market fluctuations.<\/p>\n

Your strategy should account for normal market volatility, so turn off the news and focus on the long term.<\/p>\n

Examine your comfort level<\/h3>\n

If the current market downturn is hard to stomach, talk with your financial professional.<\/p>\n

You may find that a more conservative investment mix can alleviate your anxiety while still pursuing your financial goals.<\/p>\n

Leverage low-cost index funds<\/h3>\n

Investing in low-cost index funds is a smart way to diversify your portfolio while minimising fees.<\/p>\n

These funds track market indices and offer exposure to a broad range of assets.<\/p>\n

Because they are passively managed, they often have lower fees than actively managed funds, which can translate to better returns over time.<\/p>\n

Stay informed and adapt<\/h3>\n

Keeping abreast of market trends and economic indicators can provide you with the insights needed to make timely adjustments to your portfolio.<\/p>\n

Whether it\u2019s a change in government policy or a new industry trend, being informed allows you to adapt your investment strategy accordingly.<\/p>\n

This proactive approach can help you seize new opportunities and avoid potential pitfalls.<\/p>\n

By adhering to these principles, you can weather the financial storms and if in doubt consult a professional who can guide and assist in keeping your long-term objectives on track.<\/p>\n","protected":false},"excerpt":{"rendered":"

If you kept an eye on the Volatility Index in recent months, you may be concerned about the direction of your investments. The bond market,…<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4],"tags":[],"class_list":["post-1462","post","type-post","status-publish","format-standard","hentry","category-innov8ions"],"_links":{"self":[{"href":"https:\/\/www.innov8fs.co.za\/blog\/wp-json\/wp\/v2\/posts\/1462","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.innov8fs.co.za\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.innov8fs.co.za\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.innov8fs.co.za\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.innov8fs.co.za\/blog\/wp-json\/wp\/v2\/comments?post=1462"}],"version-history":[{"count":1,"href":"https:\/\/www.innov8fs.co.za\/blog\/wp-json\/wp\/v2\/posts\/1462\/revisions"}],"predecessor-version":[{"id":1465,"href":"https:\/\/www.innov8fs.co.za\/blog\/wp-json\/wp\/v2\/posts\/1462\/revisions\/1465"}],"wp:attachment":[{"href":"https:\/\/www.innov8fs.co.za\/blog\/wp-json\/wp\/v2\/media?parent=1462"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.innov8fs.co.za\/blog\/wp-json\/wp\/v2\/categories?post=1462"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.innov8fs.co.za\/blog\/wp-json\/wp\/v2\/tags?post=1462"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}