Understanding the investment markets

Investment markets have their highs and lows and can vary from providing strong returns year after year to a sudden decline, which can be quite alarming for investors. In times of uncertainty the main thing to remember is not to panic.

An investment plan can help minimise the impacts of market volatility and should be designed to meet your long-term retirement savings goals. An investment plan should take the following investment fundamentals into consideration:

1. Time in the market

Rather than timing the market and trying determine whether it is the right time to buy or sell, what is more important is time spent invested in the market.

By taking a longer-term perspective and being prepared to ride out the market lows, you may maximise the value of your investment in the long run.

You may also gain the benefit of compound investment earnings. That is, investment earnings earned on investment earnings. The longer your investment or super compounds, the more your super grows.

2. Dollar cost averaging

Refers to the practice of investing equal dollar amounts regularly and periodically over a specific time period. When prices are low, your money can buy more. When prices are high, your money buys less. Over the long run, it generally averages out.

This strategy therefore can smooth out the market’s highs and lows and may help reduce the risk of loss. It removes the guesswork about when you should buy and sell.

3. Diversification

Diversification simply means not putting all of your eggs in the one basket. By diversifying your investment portfolio your money is spread across a number of different investments so that if one investment falls in value, others that are performing well may make up for the loss or at least reduce it.

Maritime Super maintains a diverse range of investments across a broad range of asset classes, investment managers and countries to reduce your exposure to risk. As a large investor, we can achieve diversification across a wide range of investments, which our members may not otherwise be able to access individually.

Maritime Super’s affiliated financial planners can assist you in working out your investor profile and can formulate an investment plan to help reach your retirement savings goals. Contact Member Services on toll free 1800 757 607 to make an appointment with a financial planner.