As Financial Services Industry Recovers - 4 Lessons Learned From the Global Financial Crisis (GFC)

The famous banker J.P. Morgan once claimed that the only certainty
about the stock market is that "it will fluctuate". The recent Global
Financial Crisis (GFC) is a testament to Morgan's prediction, but what
can we learn from the worst market downturn since the Great
Depression?
Don't try to time the markets
Attempting to sell when markets are high and buy when markets are low
is impossible without a crystal ball. Instead of investing your
capital as a lump sum, drip feeding at regular intervals allows you to
take advantage of market fluctuations, and take part in periods of
growth.
Remain invested for the long term
When markets fall, many investors panic and sell. This crystallizes
losses and prevents participation in the ensuing recovery. Markets
have always regained their up momentum, and the best defence is to
hold your nerve and stay invested for the long term.
Stay diversified
Concentrating your investments in a single asset class is a very risky
strategy; diversification across sectors reduces risk significantly.
At the lowest point of the GFC, the Australian share market was down
more than 50%, while a typical diversified portfolio comprising
shares, property, fixed interest and cash showed a decline of about
20%.
Seek expert advice
The GFC has emphasised the need for an experienced financial advisor
or tax accountant to guide you through the complexities of market
cycles and maximise your potential for wealth creation. Stay in touch
with your advisor for peace of mind through all market conditions.
Investing in superannuation in Australia is a great way to save for
retirement and also tax beneficial.