Market volatility is a normal — and often uncomfortable — part of investing. Share prices rise and fall in response to economic data, company earnings, geopolitical events, and investor sentiment.
When markets swing sharply, it can tempt even seasoned investors to “time the market” — to sell when prices fall and buy when things look safer.
But history shows that time in the market, not timing the market, is what really builds wealth. Missing just a handful of the market’s best recovery days can dramatically reduce your long-term returns.
The Cost of Missing the Bounce
Markets tend to recover quickly and unexpectedly after periods of decline. Many of the strongest “bounce backs” happen during times of high uncertainty — often when investors feel most fearful.
For example, if you had invested $10,000 in the Australian share market 20 years ago and stayed fully invested, your balance today could be worth significantly more than if you’d missed just the 10 best trading days over that period. Missing those few key days — which are almost impossible to predict — can halve long-term returns.
The lesson is clear: trying to time your entry and exit can do more harm than good.
Consistency and patience typically reward investors who stay focused on their long-term goals.
Why Volatility Matters — and Why It Can Work for You
Volatility is often seen as risk, but it’s also what creates opportunity. Price fluctuations allow disciplined investors to buy quality assets at lower prices. Over the long run, markets have shown a strong tendency to recover and grow, rewarding those who stay invested through the cycle.
Long-term investors benefit from:
- Compound growth — reinvested returns build on themselves over time.
- Dollar-cost averaging — regular investing buys more units when prices fall and fewer when they rise, smoothing out market ups and downs.
- Reduced emotional decision-making — sticking to a plan helps avoid reactive, fear-based choices.
The Importance of Seeking Advice
While it’s easy to say “stay invested,” it can be difficult to do when headlines scream market chaos. A qualified financial adviser can help you understand your risk tolerance, design a portfolio suited to your goals, and provide perspective during turbulent times. Guidance and accountability are invaluable when emotions run high.
Top 5 Tips for Staying the Course
- Have a Plan — and Stick to It
Define your investment goals, time horizon, and comfort with risk. A well-thought-out plan reduces the urge to react to short-term noise. - Diversify Across Asset Classes
Spreading your investments across shares, property, fixed income, and cash can reduce volatility and smooth returns. - Invest Regularly
Setting up regular contributions — whether monthly or quarterly — helps you take advantage of market fluctuations through dollar-cost averaging. - Rebalance Periodically
Markets move, and so do portfolio weightings. Rebalancing back to your target allocations helps maintain your intended level of risk and return. - Tune Out the Noise
Financial news can be sensational. Focus on long-term trends and fundamentals, not short-term market chatter.
Staying Invested for the Long Run
Volatility is inevitable, but it doesn’t have to derail your financial goals. Staying invested, diversified, and disciplined gives your portfolio the best chance to benefit from market recoveries and compounding growth. With sound advice and a steady approach, investors can navigate uncertainty with confidence — turning short-term turbulence into long-term opportunity.
If this article has inspired you to think about your unique situation and, more importantly, what you and your family are going through right now, please get in touch with your advice professional.
This information does not consider any person’s objectives, financial situation, or needs. Before making a decision, you should consider whether it is appropriate in light of your particular objectives, financial situation, or needs.
(Feedsy Exclusive)
Disclaimer: The information contained in this article is general in nature and does not take into account your personal objectives, financial situation or needs. Please consider whether the information is appropriate to your circumstance before acting on it and, where appropriate, seek professional advice.