When investing into domestic or international shares it’s important to remember the purpose and timeframe of investment. Shares typically have a high-risk of volatility which refers to the exposure of value increasing or decreasing (capital gain or loss) due to impacts from global and domestic political decisions, uncertainty, environmental disasters, economical movements and more during the short-term.
Although shares (equities) are generally exposed to significant market volatility, they have proven to achieve high reward over the long-term as they typically out-perform other investments such as fixed interest, bonds, cash and property.
If you are invested currently while markets have dipped, it’s important to remember that although your portfolio may be advertising a drop in value, this capital loss is unrealized. This means the loss is not actual until you sell your investments.
Currently, part of the continuing domestic and global market drop is due to investors panic selling. Panic selling refers to investors who choose to sell to avoid further loss in value rather than waiting out the correction or dip to point of recovery (which can take time and requires patience).
Although domestic and global markets have dropped due to surrounding concerns of COVID-19 (a new strain of coronavirus), this is a temporary concern and does not significantly impact the long-term view of equity (shares) performance over the long-term.
If you have concerns about your investments or would like investment advice, contact Future Key Financial today.