061 What to do during volatile market?

For the past one year, investing has been quite challenging. Malaysia was hurt by oil price slump end 2014, then now we are facing falling market and falling ringgit. Local unit trust has been hurt, some quite bad, by them.

In times like this, it is understandable to see client's unwillingness to continue investing. But is this wise? What should we do?

1. Sit back and review on hand portfolio

We should take an updated portfolio and their values. Sit back and looked at them. Market has changed, so should out portfolio be changed accordingly. If the portfolio is too concentrated in local equity market, think of diversifying into local bond, oversea equity, oversea bond, and cash portion. Go for more bond portion if you feel uncomfortable with equity volatility. But do not totally get out of equity market. We do not know when will market rebound, so we do not want to miss it.

2. Start a regular savings plan

As an investor, we should be happy to see equity on sales. But as human, we tends to feel uneasy seeing our portfolio lose value. It is equally not easy to put in money, large sum I mean, into equity in time like this. We can reduce our fear by starting a regular savings plan (RSP). The fund house will deduct a small sum of money from your savings account when the date approached. Sometime you will buy some high price units, some lower price units. By doing so, RSP not only will help to lower our average costs, it can help to accumulate wealth bit by bit.

3. Venture into oversea funds

Not all countries will react to market condition in the same way. Some may go up, some may go down. A little home work done and you will find some funds still perform. Example, when ringgit depreciates against another currency, try to look for opportunity in that country. Maybe their stock market and currency exchange rate make it attractive to invest some.

4. Study

Tough time is great time to learn new things. When times are good, we place ourselves in comfort zone. Take this opportunity to learn new funds, new strategies, new investment types. All these will us decide our future investment direction. Probably we have invested based on other people's opinions. Perhaps it's time we re-think are those funds suitable for our risk profile.

Talk to your consultant regarding your concerns and seeks his advice on the next course of actions.