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Valerie Henderson

How do you manage in challenging markets

Written on the 17th of October 2008 by Josman Financial Group

How do you manage in challenging markets?

It’s about the average returns over time. Expect ups and downs. Remember, history shows that over the longer term, it is the average return that will achieve long term goals.

3. Begin with an end in mind

Focus on your future; set retirement goals and have a plan.

Do you have a retirement goal or a strategy in place to achieve it? Do you know when you will have sufficient capital to provide you with enough income for your retirement? A plan will help you decide.

Sitting down and looking at what you want to do in the months and years ahead does not come naturally or easily but it is probably the most important step to take before you have the confidence that you are on track.

If you always do what you’ve always done, you’ll always get what you’ve always got.

4. Know where your money is going

Start managing your cash flow and create a priority spending plan. Plan to save about 20% of your gross earnings. Make sure your short, medium and long term goals are set so you allocate savings to your goals.

By assessing your spending in order of priority, you will discover new ways you can save without significant impact on your lifestyle.

Break your spending down to essential items, important items, luxuries items.

If you want to make a difference, you need to recognise your spending weaknesses and be prepared to make changes to your spending habits.

5. Grow your money

Now you have ideas about how to save, you can look at ways to grow your money.

At this time in the market, while prices are falling, you have opportunities to buy more units at a cheaper price. In the future, these units will grow in value and so will your net wealth! It is called dollar cost averaging.

6. Build your money skills

We spend many years being educated about how to earn money but when are we taught what to do with it, especially in times of market volatility? When have you ever been taught about how markets behave?

Remember when you were learning to drive. Your confidence grew with practice, knowledge and experience. Money management is the same. No one is born with money skills. The best way to understand how to make the most of your money is to tap into expert educators and advisers so that you can understand how markets work and the best way to manage within them.

What else can you do?

Attend a seminar - understand how to manage in volatile markets and make more of your super.

Visit your Financial Planner - meet face to face or speak with a financial planner over the phone. Get advice that is right for you and simple to understand.

Taking control of your financial future is as simple as making up your mind to do something now.

The advice supplied in this article is general advice only and does not take into account or consider your personal objectives, financial situation or needs. Before acting on this information, you should consider the appropriateness of the information to your individual needs or seek independent advice from a properly qualified professional.

There are simple steps you can follow to gain control of your financial future. These steps are especially important during times of financial turbulence. They help you to remain calm and confident.

Six steps to a better money plan

Your spending habits make all the difference to your savings. Here are some steps to set you on the path to a more comfortable and secure future.

1. Be proactive

Procrastination is the greatest deterrent to achieving long term goals. Don’t put off advice and planning until tomorrow. When is the time ever right? Keep moving with your own financial plan. It’s all about time in markets, not timing. Time is our greatest ally. The more time you have to compound interest on your returns, the less cash you’ll need to contribute.

2. Remain positive

Emotional decisions in highly volatile markets can cause us to make poor financial decisions. How you react in these volatile times will impact your long-term gains. Rational decisions are best.

"History tells us that markets always recover over time. Indeed that is the point with superannuation - there is time to recover given average working lives of 30-40 years and retirements spanning 20 years plus" Senator, The Hon Nick Sherry's address to Rice Warner Actuaries Workshop
(15 Oct 08)

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How do you manage in challenging markets

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