Nervous investors encouraged to ‘drip-feed’
Drip-feeding savings into the share market could cushion wary investors from market volatility while increasing their yields over time, a wealth adviser believes.
With record-low bank deposit rates, investors are increasingly looking for higher returns but are often afraid of full market exposure, according to Chris Kennedy, head of the Wealth Advisory Focus Group for mid-tier accounting and advisory firm William Buck.
A slow and long-term investment strategy could reduce investors' contact with unnecessary risk, he said.
"Timing the market is also getting harder so a good approach for more cautious investors is to average into the market," according to Kennedy.
"Investors looking for solid yields are just not getting that from money sitting in banks at the moment," he said.
He said with interest rates expected to drop even further and a recovering residential property market, investment uncertainty has become a key trend for ‘mum and dad' investors in 2013.
"We've seen some emerging positive signs from the residential property market, but it's likely to be a slow recovery and provide returns over the long-term," he said.
By slowly drip-feeding money into the market, investors could ride out the market fluctuations, he added.
"This involves putting regular lump sums of money into the share market over a period, and this has the effect of averaging out the returns over that time period and beating any volatility. If you stay in the market for a number of years, over time you'll achieve good returns," he concluded.
Recommended for you
The latest Morningstar asset manager survey believes ETF providers are likely to retain the market share they have gained from active managers.
Negative market movements, coupled with net outflows, have prompted a near $6 billion decline in Challenger’s funds under management for FY25’s third quarter.
The real estate investment manager has positioned the APAC region for future growth with an internal promotion to the newly created role of deputy head of Asia Pacific.
Clime Investment Management has welcomed an independent director to its board, which follows a series of recent appointments at the company.
