18 Nov Tips for investing in volatile times
Markets these days are anything but certain. From the COVID-19 pandemic, to the Russia-Ukraine war, looming energy crisis and, closer to home, inflation rates peaking at a 14-year high, volatile markets have become the norm. Aspiring investors might wonder, is now a good time to invest? After all, there are so many uncertainties affecting the market.
But don’t forget that the world is constantly in flux and it is volatility — no matter economic, political or social — that moves markets. Perhaps the question is not so much whether you should invest, but how you can invest better during volatile times.
Why you should continue investing during uncertainty
When you invest regularly, the money you save each month can accumulate into significant savings over time. With its potential rate of returns, you will be better equipped to reach your financial goals when you give your investments a chance to grow over time. Conversely, by not investing, you could be missing out on opportunities to grow your money.
Many investments have the potential for profit, regardless of economic conditions or market performance. That’s because markets don’t always go down — they go up as well.
Not to mention, investing is your best shot at beating inflation. Overall inflation rates for Singapore currently stands at 7.5%, according to the Consumer Price Index (CPI) for September 2022. To beat inflation, your money has to grow at a faster, if not similar, pace in order to keep up. Anything less than that would just mean that the value of your savings is getting eroded as time passes.
In the long run, your goals are more important than short-term market conditions, and investing is one of the key ways to achieve it. Rather than staying away from investing, it is better to take a well-informed approach and adjust your investment strategy as events change over time.
4 tips to get more from your investments
Here’s how you can get more out of your investments even during uncertain times.
1. Stay the course
If you are new to investing (or even if you are not), it is normal to feel jittery when you see the markets declining. At this point, you may be tempted to pull out your investments to avoid losing more, but doing that may have a more detrimental effect.
That’s because investing is a long-term game. While it may be difficult to see opportunities amidst an uncertain economic environment, you can ride out volatility by investing with a long term view.
It is important to remember why you are investing in the first place and the goals that you are hoping to achieve. Keep your emotions in check and stick to your investment plan rather than acting on impulse. With a longer investment horizon and a portfolio that matches your risk tolerance, you may be able to ride out tough times, as well as extreme highs and lows in the markets.
2. Look for opportunities
It may be harder to come across opportunities during uncertain times, but you’ll find them as long as you look hard enough. Look for industries and trends that offer positive returns even when markets are stressed.
For example, these could include the travel industry, as borders open up and revenge travel is in full swing, or even sustainable investing, which is likely to be a mainstay as companies and countries worldwide embark on their carbon net-zero plans.
You can also increase your returns by identifying products that offer greater gains while matching your risk tolerance. One example is Etiqa’s range of investment-linked plans (ILPs), which offer bonus investment units of up to 64% of annual premium in your first 2 years of investment. This way, you’ll get a head start on your investments.
3. Manage your risks
One of the key strategies for investing during volatility is to diversify and review your portfolio. This helps you manage your risk and protects your portfolio by limiting exposure to market shocks.
Consider investing across a mix of asset classes, geographical areas, as well as industries and segments. This helps to build the resilience of your portfolio and ensures that the overall performance of your portfolio remains strong even if one asset gets hit hard.
At the same time, don’t underestimate the impact of a portfolio review. This helps you ascertain if your investments are performing according to plan, and more importantly, whether your portfolio needs rebalancing — in other words, keeping your asset mix in line with your preferred allocation. You might want to consider rebalancing your portfolio if it no longer matches your risk appetite or helps you meet your financial goals.
This holds true for ILP policyholders as well. For those investing with Etiqa, you can rebalance your portfolio by switching out your funds for free at any time. You can also build the resilience of your portfolio with access to exclusive institutional funds, and by choosing funds with low correlation.
4. Use dollar cost averaging
Many view the bear market as the time to hold back on investing but here’s why you should consider pumping more money in.
With stock prices on the low, you use this buying opportunity to build your portfolio at better prices. Otherwise known as dollar cost averaging, this strategy involves purchasing more shares when prices are low, such as during a bear market, and less when they become more expensive.
Regular premium ILPs such as Invest achiever and Invest builder both use the concept of dollar cost averaging to help you accumulate wealth in the long run while reducing your risks.
Investment-linked Plans (ILPs): An investment tool worth considering
When it comes to investing during volatile times, performance and risk management takes precedence. With potentially higher returns, the flexibility to manage your funds and extra protection to boot, you get all that and more with Etiqa’s range of ILPs.
Here’s how you can boost your investments with ILPs such as Invest achiever and Invest builder:
- Earn more with less: Accelerate your gains with a start-up bonus1 of up to 64% of your premiums in your first 2 years of investment, and enjoy a power-up bonus1 of up to 2.00% p.a. from the 11th policy year onwards.
- Effective use of your money: Enjoy greater value as 100% of your premiums go into purchasing sub-funds, unlike ILPs of the past.
- Flexibility: Manage your risks and rebalance your portfolio with free and unlimited fund switching2 to cater to your investment strategy
- Protection: Protect your loved ones with a whole life death and total & permanent disability benefit (up to age 65), and a life contingency benefit that lets you make partial withdrawals for free or take a premium holiday3 during a covered life contingency event.
Find out how you can invest better with Etiqa or speak to us to discover our range of ILPs today.
1 Subject to applicable terms and conditions. Please refer to the policy contract for more information.
2 We reserve the right to revise the fund switch charges (if applicable) by giving thirty (30) days’ written notice.
3 Net premium refers to total premium paid plus total top-up(s) less any partial withdrawal(s) and monthly income payout.
4 Based on the minimum regular premium amount for a premium payment term of 20 years.
Information is accurate as at 16 November 2022. This policy is underwritten by Etiqa Insurance Pte. Ltd. (Company Reg. No. 201331905K).
Invest achiever and Invest builder are Investment-linked Plans (ILP) which invest in ILP sub-fund(s). Investments in these plans are subject to investment risks including the possible loss of the principal amount invested. The performance of the ILP sub-fund(s) is not guaranteed and the value of the units in the ILP sub-fund(s) and the income accruing to the units, if any, may fall or rise. Past performance is not necessarily indicative of the future performance of the ILP sub-fund(s).
A funds summary and product highlights sheet(s) relating to the ILP sub-fund(s) are available and may be obtained from us via https://www.etiqa.com.sg/portfolio-funds-and-ilp-sub-funds/. A potential investor should read the product summary, funds summary and product highlights sheet(s) before deciding whether to subscribe for units in the ILP sub-fund(s). As buying a life insurance policy is a long-term commitment, an early termination of the policy usually involves high costs and the surrender value, if any, that is payable to you may be zero or less than the total premiums paid. You should seek advice from a financial adviser before deciding to purchase the policy. If you choose not to seek advice, you should consider if the policy is suitable for you. This content is for reference only and is not a contract of insurance. Full details of the policy terms and conditions can be found in the policy contract.
These policies are protected under the Policy Owners’ Protection Scheme which is administered by the Singapore Deposit Insurance Corporation (SDIC). Coverage for your policy is automatic and no further action is required from you. For more information on the types of benefits that are covered under the scheme as well as the limits of coverage, where applicable, please contact us or visit the Life Insurance Association (LIA) or SDIC websites (www.lia.org.sg or www.sdic.org.sg). This advertisement has not been reviewed by the Monetary Authority of Singapore.