When market volatility is at an all time high, keeping to a strategy, or let’s face it creating one, can be tough. It’s important that you understand strategic tips for volatile markets.
The downside of not taking time out for your strategy is that there is a tendency to keep a short-term focus at an operational level to try and pick quick wins to generate financial returns. Sometimes in the process, this short-term focus can undermine longer term value and returns.
Here are our 7 strategic tips for volatile markets:
1. Know what your position is.
A surefire way to understanding your current position is by conducting a financial health check. This is an analysis of the current state of you and/or your business. It is an analytical review of your financial strategy, operations, and performance with a view to providing a broad overview of your financial health and identifying potential issues.
Understanding your financial position will reveal your risks and capacity to develop, both in terms of your personal finances and your business (if applicable).
2. Know what to look for.
Once you know your position, it’s time to find out what measures are going to give you the best insight into your performance. In a volatile market, this information will provide you with the data you need to make informed financial decisions at any given point in time.
Understanding key financial metrics and indicators can help you identify opportunities and mitigate risks, allowing you to adapt your financial strategy as needed in response to changing market conditions.
3. Be prepared to make quick decisions.
If you know your position and have the data you need, be prepared to make quick decisions and take the first mover advantage. If you can nail the first two points, you have your radar perfectly adapted for identifying opportunities and mitigating risk.
While the pandemic and market instability is difficult, we have also seen these times be an opportunity for innovation, as people adapt to finding new solutions to their financial complexities.
4. Don’t bank on a single opportunity.
If COVID has taught us anything, it is that things can change, often quicker than you can prepare for. You need to be adaptable and willing to change with the circumstances. While relying on one single opportunity can be tempting, whether it be a business, job, investment, or source of income, an over-reliance on any one thing exposes you to risk.
It is important that you are diversifying and building strong and sound, but also flexible and resilient income and investments, to ensure stability in the face of adversity.
5. Understand your end game.
What are you aiming for? What is your end goal? Early retirement? Family empire? Financial independence?
Even if you plan on simply living a comfortable life with no extravagant goals, that is still a decision. Your goals and the progress you make towards them can impact your financial structure, focus, and decision-making. It is important to identify not just what your goals are but why, and create a strategic financial plan to achieve them. Your end game and your progress towards it impacts your structure, focus, and decision making.
Unsure of what your goals are or how to achieve them? Check out our 3 Steps to Achieving your Financial Goals.
6. Document your strategy.
Documenting your strategy is crucial – simply keeping it in your head is not enough. This does not have to be an onerous War & Peace approach. Rather, it is about understanding what you are aiming for and breaking it down into specific, measurable objectives. From there, you can create a plan with clear outcomes and timeframes, ideally broken down into smaller, achievable goals (refer to point 5). This approach can help you stay focused and accountable, and makes management meetings a lot more meaningful.
7. Talk to your advisor.
When in doubt, it’s always best to consult the professionals. In a volatile market, seeking advice from your trusted advisor will be hugely beneficial for both your financial and mental state. Your advisor can provide you with an objective perspective, help assess risks and opportunities, and provide guidance on your strategy. They can also help you stay accountable and ensure you are on track to achieving your goals.
A quality advisor will be an invaluable asset to you and/or your business during times of uncertainty.
So there you have it! Our 7 strategic tips for volatile markets! Still unsure of where to start or want to know more? Our expert financial advisors are here to help!
With over 2 decades of experience in financial planning and advice, our trusted advisors have dealt with their fair share of market volatility. They are equipped with the knowledge and experience to help you navigate market volatility. With the right strategy and support, you can ensure that you not only survive, but thrive in a volatile market.
Why wait? Get in touch with us today!
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