We have put some information together to help you understand Market Volatility and how this can impact your Whai Rawa investment. We recommend reading through the below FAQ's and watching the videos which describe general concepts that apply to your investments such as your Whai Rawa and Kiwisaver accounts.
Market Fluctuation FAQs
We have seen considerable volatility in the markets recently. Mercer, our Investment Manager, advise that market corrections are normal and over longer-term markets tend to recover.
The Financial Markets Authority (FMA) comment that investments work in timeframes of decades, up to 40 or 50 years. For these long-term periods, a fund with a higher allocation to growth assets is usually the best option. These funds have more volatile assets in them, such as shares and property. So, when world markets are unpredictable, they will be the ones with balances that move around more. The upside is, over the longer-term these funds will usually provide higher returns, growing your money more.
Consider your investment strategy in your decision. Your investment timeframe, how risk averse you feel and your current life situation will all contribute to your decision.
The Financial Markets Authority (FMA) – our regulator – comments that investors should consider carefully before switching funds, as they will, on occasion, see major ups and downs in balances. Recognising that some people might need the money immediately for a first home, switching funds during market turbulence forces the sale of investments at lower prices and gives up the prospect of gains when those investments start to recover. Remember if your balance falls, you haven’t actually lost any money – it just means the value of your investments has dropped. But if you change your fund that loss becomes real – your provider has to sell your investments at that new low value, so you end up locking in that loss.
If you’d like to revisit your risk profile at this time, one of the ways you can do this is by taking our Risk Quiz here –www.whairawa.com/riskquiz
To keep updated on investments and financial markets Whai Rawa gathers information from a wide range of parties involved in New Zealand and global markets and we recommend you do the same. Here are some useful links:
- FMA – www.fma.govt.nz
- Sorted – www.sorted.org.nz
- Smart Investor – www.smartinvestor.sorted.org.nz
Understanding Market Volatility – Video Series
We’re excited to share with you two videos we’ve worked on alongside our Investment Manager, Mercer NZ Ltd. We know that the market can be volatile and this may have caused you to question how market cycles work and consequentially whether or not you’re in the right fund with your investment. These videos help to understand the current movements in the financial markets and what impact market volatility has had on your investment.
These videos describe general concepts that apply to your investments – whether you have a KiwiSaver, Whai Rawa or other superannuation/investments.
NOTE: The information contained in the video is intended for general guidance and information only and is not personalised to you. It does not take into account your particular financial situation or goals. Before making any investment decision, you should refer to the Product Disclosure Statement and / or consult an appropriately authorised adviser.
