How to be share savvy in a volatile market

Friday, 09 September 2011 15:16

After a volatile few weeks the stock market, some financial commentators are suggesting now might be a good time to dip your toe in the share market pool.

But where do you start?

Here are our top 5 tips on how to be smart in a volatile share market:

1. Educate yourself

It is important to develop some core knowledge about the stock market and how it works, particularly with all the jargon that flies around. The good news is the information is easy to find. There are numerous online sources and publications available to help you grow your understanding of the stock market. Try visiting the Australian Securities Exchange (ASX) www.asx.com.au and keep up to date through the financial sections of newspapers.

2. Speak to a financial planner

Financial planners can provide you with solid advice about investing in shares and a range of other investment options. A financial planner will consider your short and long term investment objectives and recommend an appropriate investment strategy to help you achieve your financial goals. Most are backed by research teams and stock analysts which is really important as current market information is vital when investing in volatile markets.

3. Diversify your portfolio

As share markets experience both highs and lows, it’s best not to put all your eggs in one basket. A diverse and varied portfolio across a range investment options can help ensure that returns are balanced to an acceptable average, i.e. good returns from one sector may balance poor returns from another. This will help prepare you for the inevitable swings in short term performance.

4. Save on Brokerage fees by trading online

Our Members can trade for as little as $19.95 through www.etrade.com.au. It’s easy to open an account online and their trading platform is consistently well reviewed. On top of saving you money E*TRADE offers a wealth of share investment information and research plus news and share tips.

5. Have long term objectives

In order to really make the most out of your investments you should develop a long term plan, a financial plan will provide you with a roadmap to help achieve your goals. Sit down and work out how much money you want to invest up front and how much you can invest over the medium term. Remember not to let your emotions cloud your judgement, just because you like a particular company or sector, it doesn’t mean it is an ideal investment.

For more investment and financial planning information contact us today.