Financial Market Volatility
Market volatility concerns changes in the value of your investments in a financial market. Generally the higher the risk associated with the investment, the greater its investment volatility. Investors who are uncomfortable with fluctuations in value tend to look for more stable investments which have a lower risk of loss but also lower potential returns.
How does market volatility affect me?
The general trend for investments in the Australian share or stock market over the last 30 years has been upwards. This has happened despite periods of extreme volatility in the market such as the stock market crash of the 80’s, the dotcom boom at the turn of the century and the recent global financial crisis in 2008/2009.
If you are buying and selling investments on a daily basis, financial market volatility may have a huge effect on you. However, if you are investing for the long-term, many of the effects of market volatility are ironed out over time.
Periods of investment volatility can often present good opportunities to buy investments. However it’s important not to try and ‘time the market’ and to be fully aware of your attitude to risk.
If you’re concerned about the effect of volatility on your investments, or you’re wondering whether it’s a good time to invest, talk to your financial adviser or planner.
Learn more about Markets
- What types of investment markets are there?
- How do I invest in different stock markets?
- What is market volatility and how can this affect me?
- What affects share prices?
- How do I understand financial market performance?
Did you know?
Investment portfolios are usually built over a long time and most need sound planning.
The rise and fall of a share price is complex. However, share prices are generally affected by two things, company performance and wider economic conditions.
