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Investors should think long-term and stick to the plan –
leading rural financial adviser
17 November 2008
It is always difficult in times of uncertainty, with volumes of negative news and
headlines, not to question your investment strategy. However, history shows that
investors who think long-term and stick to their plans usually minimise losses and
reap gains as markets weigh up fair value, says Rabo Financial Advisors general
manager Colin Williams.
“While it is totally understandable for investors to be concerned, they should not
panic with the erratic fluctuations in stock prices,” he says. “Long-term investment
strategies will ultimately regain their strength and rebuild their wealth as long as
investors remain cautious and stable during economic downturns.”
At the moment, Mr Williams says, the market has seen investment analysts
devaluing stocks based upon their future earnings potential as opposed to their
current and historical performance. In other words, they are expecting tough times
ahead.
“However, what we have learnt from past investment crises, including recessions, is
that eventually we come through and are often in better shape,” he says.
“As stock prices reflect the value of future earnings they normally race upwards well
in advance of other leading economic indicators that eventually show the worst is
behind us. And upward movements rarely get the same media coverage as
downward movements in the market, so when the markets are out of the media that’s
normally a good sign.”
Part of major agribusiness lender Rabobank, Rabo Financial Advisors (RFA) is a
financial advisory service specialising in the financial planning needs of the
Australian rural and regional community, as well as the city-based clients.
“As advisers, we are not in the business of trying to second guess the short-term
direction of the markets as this is traditionally fraught with danger, not to mention
additional transaction costs,” Mr Williams says.
Diversification across various investment markets is key, including careful
diversification across a portfolio. In other words, it’s critical for investors not to put all
their eggs in one basket.
“For most of us, our end-goal or long-term goal is many years away – this really does
put the current crisis into perspective,” he says.
“In the current climate, it is impossible to avoid market volatility. However, by
remaining diversified and maintaining strict investment processes and guidelines, risk
will be reduced for investors and they will be well-positioned for future investment
growth.”
Financial planning services are provided by Rabo Financial Advisors Limited
ABN 46 096 538 288 AFSL 224709. RFA charges fees for its advisory services
and, if you acquire a financial product or service recommended by RFA, it may
receive monetary commission based on the amount of the
investment/premium.
Rabobank Australia is a part of the international Rabobank Group, the world’s leading specialist in food and agribusiness banking. Rabobank has more than 110 years’ experience providing customised banking and finance solutions to businesses involved in all aspects of food and agribusiness. Rabobank has a AAA credit rating and is ranked one of the world’s safest banks by Global Finance magazine. The bank operates in 43 countries, servicing the needs of more than nine million clients worldwide through a network of more than 1500 offices and branches. Rabobank Australia is one of Australia’s leading rural lenders and a significant provider of business and corporate banking and financial services to the Australian food and agribusiness sector. The bank has 50 locations throughout Australia.
Contact
For further information please contact
Elise MacDonald, Public Relations Consultant
ph: (02) 8115 4861
email: elise.macdonald@rabobank.com
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