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Market Watch October 2018 – Volatility
Over the past week or so, global share markets have fallen significantly due to growth concerns. One of the catalysts is the concern that rising US longer-term interest rates could lead to slower US and global economic growth, while another is the ongoing concern that the US-China trade frictions could develop into a more significant and protracted trade war. At the heart of both issues is concern about the potential for slower economic growth, and therefore slower sales and profit growth.
Financial markets are volatile by nature – which means they frequently move up and down. When there’s a fall in the market, it’s perfectly natural to feel apprehensive and be concerned about the market’s impact on your investments.
Short term decreases don’t always equal long term losses
When the market drops as it has recently, you’re likely to notice a decrease in the value of your investments. Even if your investments fall in value in the short term, however, you can still expect them to generally recover in the longer term. That’s why it’s important to step back and look at the bigger picture, and focus on how you’re tracking towards achieving your financial objectives.
It’s also crucial to remember that your exposure to these market events will depend on the make-up of your investments and further illustrates why portfolio diversification is so important.
Talk to your financial adviser
Financial market movements can be complicated, and may seem overwhelming, but the important thing is to remain focused on your financial objectives and how you’re tracking towards achieving them. Your financial adviser can explain how any market changes may affect your personal situation and your long-term financial plan. For more information, contact McKinley Plowman on 08 9301 2200 or visit www.mckinleyplowman.com.au.
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