6 Investment Rules

1 August 2011

1.   Take comfort from history – the long-term trend is up.

Shares or Property always trend up over the long term. At least 12 major events have impacted the Australian share market or property market over the last 20 years. Despite this, the market has always recovered.

 2.   Make a plan and then stick to it.

The longer your investment timeframe, the more likely it is you’ll experience some form of short-term market volatility.

Understand what you’re trying to achieve and how long you’re prepared to invest. Understand how much risk you’re comfortable with and make sure it’s reflected in your investment plan.

 3.   Don’t react to short-term market movements.

Investment markets move in cycles, so it’s difficult to forecast when they’ll rise or fall.

Moving your money in and out of the market during a downturn means you could potentially miss out on any positive bounce gained in a strong market recovery.

 4.   Diversify your investments to spread risk.

Diversification — or spreading your investment portfolio over a range of asset classes such as; shares, property, fixed interest and cash  can help you spread your exposure to risk.

So, if one investment or asset class loses ground, it’s likely that your other investments may offset the loss.

You can diversify your investment across different asset classes, regions and investment managers or styles.

 5.   Get advice from a qualified source.

A financial adviser can help you decide what you want to achieve with your money and how to meet your goals, while taking into account your needs, objectives and your attitude to risk.

 6.   Stay informed.

It pays to stay informed about your investments and what’s happening in the market.

For the latest on what’s driving the market and tips for investing during uncertain times, visit www.bt.com.au/volatility.

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