The equity markets have been unstable since the last few months on account of several reasons such as economic slowdown, trade tension, global recession risk etc. This volatility has made many investors cautious as their portfolios are not producing the required returns. Financial advisors might also be receiving similar concerns from their clients about their portfolios.
The best way to tackle this volatility is to stay away from all the panic and continue to remain invested. As Warren Buffett rightly said ‘the stock market is a device for transferring money from the impatient to the patient’, markets are likely to repay those who display conviction and patience.
Financial advisors must discourage clients from redeeming their investments at the presently existing lower valuations. Make them realize that markets have corrected before and stabilized eventually. Explain to them that discontinuing their investments will give away their likely earnings to some other investor who chose to stay invested.
Since the markets right now are trading at comparatively lesser estimations, financial experts must persuade their clients to seize this opportunity and maximize their investment coverage at attractive valuations rather than reflecting on short-term losses. This way, clients will be able to average out the investment cost. Additionally, it will increase their likelihood of gaining higher returns when the market recovers.
Suggesting your clients to start a mutual fund SIP can also help in handling market instability and moreover, aid them to move one step closer towards achieving their financial objectives. No investor would like to see negative returns in their portfolio; however, experts say that it’s only a matter of time before the markets turn favourable.
Market volatility is the time when the clients’ faith in their financial advisors is tested. You must guide your clients through this difficult journey and ensure that such temporary market movements don’t influence them to take any wrong decisions.