AMP Feb 2008


Sub-prime crisis (whatever that is), US recession, Share Market heading south, Fuel prices heading north and you not getting any younger. It’s all too hard. Maybe it’s time to cut and run? Maybe not!

To say we are in interesting economic times would be something of an understatement. The Aussie economy, riding at least partly on the back of high demand for our resources appears to be powering along reasonably well in an uncertain world. The goings-on in the US certainly have an impact on our economic well-being, but we are truly part of a global economy today and the US economy isn’t the whole story any more. There’s China, of course and a heap of other trading partners in Asia and Europe, not to mention Japan.

IF you got your investment strategy correct then a level of volatility in investment markets should not make you too jumpy. Not that anyone should be happy when their assets are falling in value but it was always “when, not if” this would happen. The longer you hold your investments, the more comfortable you will become with such occurrences. And that’s really a key variable in the investment risk equation. As a general rule, we can take more MANAGED risk with longer-term investments, while short-term savings should be held in less volatile assets.

If you are losing sleep in the current climate then you should question your actual tolerance to investment risk, as opposed to your theoretical tolerance as expressed when markets had been growing strongly for a number of years. If you don’t “get it” then there’s never been a better opportunity to spend some time with a suitably qualified Financial Planner.

Peter Lake is an Authorised Representative of AMP Financial Planning Pty Limited ABN 89 051 208 327 (AMPFP), AFS Licence No. 232706. Any advice contained in this document is of a general nature only and does not constitute personal financial product advice. In preparing the advice no account was taken of the objectives, financial situation or needs of any particular person. Therefore, before making any decision, readers should consider the appropriateness of the advice with regard to their particular objectives, financial situation and needs.

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