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5 things to consider before changing your investment strategy

We all know that sinking feeling when we see news headlines about a fall in the stock market. Your first reaction might be to sell your shares before they lose any more value – but is this really the best move?

Like any major financial decision, it’s best to take your time and really consider all your options rather than acting hastily. For instance, there may be other ways you can minimise the impact of market movements by restructuring your investments or adjusting your portfolio.

Here are 5 questions to ask yourself so you can keep your long-term investment goals on track – even when markets take a downturn.

1.What type of investor are you?

Almost every investment comes with some level of risk – and generally speaking, the greater the risk, the higher the potential returns. So first of all, think about how comfortable you are with short-term market fluctuations, which can impact the face value of your investments. And remember, your comfort level may change as you move through different life stages.

For instance, if retirement is still a long way off, you might choose to invest heavily in growth assets, as you have a longer timeframe to ride out any dips in the market and generate returns over the long term. On the other hand, if you’re approaching retirement, you may be more conservative in your investment approach so you can protect the wealth you’ve already accumulated.

2.When did you last review your strategy?

For many of us, our investments tend to be something we set and forget. But it’s worth revisiting your investment strategy from time to time – and not just when markets move significantly. That way, you’ll be better prepared when markets drop.

With the help of your financial adviser, you can ensure you have the right mix of assets for your investment timeframe and risk profile. Your adviser can also help monitor your investments through periods of increased market movements, so you can be confident that you’re on track towards meeting your financial goals.

3.Which asset classes are right for you?

Different investments fall into different asset classes, each with their own levels of risk and return. It’s worth understanding the basics about each one, so you can choose an investment mix that suits your financial circumstances and stage of life.

The main asset classes are:

  • cash – this includes money held in interest-earning savings accounts. It provides a stable and easily assessible income. 
  • fixed-interest investments – this include term deposits and government or corporate bonds. They pay regular interest over a fixed term, usually between one and three years.
  • property – this includes direct property investments but also property securities, which allow you to invest in commercial, retail and industrial property holdings via the stock market.
  • shares – also known as equities, these give you part ownership of an Australian or international company, allowing you to earn dividends through capital growth.

4.How diverse is your portfolio?

Every market moves in cycles – so no matter which assets you hold, they’re bound to go through periods of downturn. To help offset dips in the market, consider investing in different industries and asset classes. This strategy is called diversification.

Each investment can perform differently under the same market conditions, so when the value of one falls, another may go up. While there are no guarantees that diversification will fully protect you against losses, spreading your capital across a range of investments can balance out the overall levels of risk and return in your portfolio.

5.Are there other ways you can invest?

If you’re nervous about investing in shares directly, there are alternatives available. One option is to invest in a managed fund, where you pool your money with other investors. Your combined capital can then allow you to invest in assets that might otherwise be out of reach to a sole investor. It can also help spread your risk exposure across a wider selection of investments.

There are many different types of managed funds, and they all usually focus on a specific investment objective. Each comes with its own risk profile and approach, so make sure you shop around to find one that best aligns with your investment strategy.

Want to learn how you can use market movements to your advantage? Find out here.


Information on this webpage is provided by Avanteos Investments Limited ABN 20 096 259 979, AFSL 245531 (AIL) and Colonial First State Investments Limited ABN 98 002 348 352, AFSL 232468 (CFSIL). It may include general advice but does not consider your individual objectives, financial situation, needs or tax circumstances. You can find the Target Market Determinations (TMD) for our financial products at, which include a description of who a financial product might suit. You should read the Financial Services Guide (FSG) available online for information about our services. This information is based on current requirements and laws as at the date of publication.

Tax considerations are general and based on present tax laws and may be subject to change. You should seek independent, professional tax advice before making any decision based on this information.

AIL and CFSIL are not registered tax (financial) advisers under the Tax Agent Services Act 2009 and you should seek tax advice from a registered tax agent or a registered tax (financial) adviser if you intend to rely on this information to satisfy the liabilities or obligations or claim entitlements that arise under a tax law.