As a financial advisory firm who has weathered several crises and most notably the 2008 Global Financial Crisis (GFC), we have learnt that while we cannot predict how high the markets will go or how soon they will recover, we do know that over time markets will go up and have gone up.
We also know that staying invested helps your investment portfolio to capture the gains. If you are currently investing regularly with us, dollar cost averaging will enhance your gains further by lowering your average price and improving your expected return. Doing a lump sum top up when markets are down will also help improve your portfolio’s performance in the long term.
What You Should Do During A Market Correction?
The S&P 500 has come down by about 10% and that’s known as a correction.
Now, corrections are actually pretty common. They tend to happen about once a year, and in fact, we already have one earlier this year in February. But most people don’t remember it because the market recovered pretty quickly and in fact, made new highs.
Now in Providend, we have actually gone through many ups and downs in the markets. Most notably, in 2008, during the Global Financial Crisis and there are two things which we have learnt- The first one is that markets always recover and go higher in the long run. And two, market corrections are a great opportunity to invest. Because you will be investing at lower prices.
So, there are two ways which you can take advantage of this market correction. The first one is to simply do a top-up to your portfolio and the second one is to do dollar cost averaging. Dollar cost averaging simply means to invest a fixed sum into your portfolio every month.
So, contact your client adviser and if you can, do a top-up to your portfolio or dollar cost averaging. Remember, investing when the markets are lower means your returns will be higher.
We do not charge a fee at the first consultation meeting. If you would like an honest second opinion on your current investment portfolio, financial and/or retirement plan, make an appointment with us today.