Investing can be very stressful. There is no doubt that in volatile markets we feel the impact of a loss much more than a gain. Our hearts sink when we read headlines such as “Billions wiped off market” or “Recession risk in Trump tariff war”.
It’s human nature to respond to uncertainty with fight-or-flight. But when it comes to investing in volatile markets, I favour the fight, and I don’t back down.
By way of comparison, think of Australia’s superannuation system and the magic of compound returns over long periods of time. Assuming you had invested $10,000 into our ASX All Ordinaries index 30 years ago and did nothing other than reinvest the dividends, that investment would now be worth over $135,000.
Long-term performance leads to enduring gains from growth assets. But it’s important to let time do its work and not jump when the markets do. Some simple actions can help significantly:
Free cash flow
Start by working out how much free cash flow you have and consider whether there are spare funds available that could be regularly and strategically drip-fed into the market. A reasonable strategy is to buy fewer units when the market is running hot, and more on a dip. That is a strategy that can help take emotion away from the highs and lows of the market.
Although past performance can’t be used to guess the future, gradually adding more to an investment is a philosophy that can be applied to ensure discipline and dial down any trepidation.
Ignore the headlines
When it comes to reading the markets, they do not like uncertainty, and we have had lashings of that in 2025, whether it be Donald Trump’s return to the White House and drastic policy changes, or wars in the Middle East or Eastern Europe. Ignore the headlines declaring doom, or a new era.
Instead, think about the last 30 years; we have seen devastating terrorist attacks, wars and sustained conflicts, the global financial crisis and the COVID pandemic. Throughout it all, stock markets have still been able to climb the wall of worry.
Play the long game. Have a robust, well planned investment strategy in place that guides every investment move. Take emotions out of the investment process. It is important to remember there is always going to be ups and downs that will give investment palpitations; but see through them and stay on course.
Don’t sell out when thing get bad
Emotional decision-making can be costly, such as selling out when prices drop. Behavioural-driven decision making can be hard to combat when markets become wobbly.
Remove emotion from the process
Working with a professional adviser can assist with removing emotion from the investment process and who can ensure decisions are made in line with your risk tolerance. Staying the course is the best way to go when it comes to building wealth; riding through the bad times is necessary to enjoy the good times.
Rebalance portfolios every now and then
When markets move, an investment mix can drift away from the original strategy. That’s why it’s important to revisit the portfolio and rebalance it from time to time. It’s not about reacting to headlines, but about making sure investments still line up with goals and how much risk you’re comfortable with. Rebalancing can also help you stick to the golden rule of investing – buying low and selling high – without having to overthink it.
Brendan Bate (ASIC No. 1272327) and HLB Wealth Pty Ltd (ASIC No. 428645) are Authorised Representatives of Paragem Pty Ltd (“Paragem”), ABN 16 108 571 875, AFSL No. 297276.
Disclaimer: The information contained in this article has been provided as general advice only. The contents have been prepared without taking account of your personal objectives, financial situation or needs. Before you make any decision regarding any information, strategies or products mentioned in this article, you should consult your financial adviser to consider whether that is appropriate having regard to your personal objectives, financial situation and needs. Please note that any audit, taxation and accounting services are provided by HLB Mann Judd and are not within the authority of Paragem’s AFSL No. 297276.