Peter Kelley & Lavina Tharani, Professional Investment Offices

With the share-market falling, should I be selling out and moving my investment funds (or what is left of them) to more secure investments?

By selling out of your investments because they have gone down in value, you will crystallize your losses. A loss is currently only a paper loss (you still own the same number of shares), however selling investments will turn this into an actual loss. Unless your circumstances have changed and you actually need to sell the investments to release capital for other purposes, then it may be prudent not to be selling whilst prices are depressed. Look at it from a different perspective. If you believe your home was worth $400,000 a year ago, but your local real estate agent has told that in the current market it is only worth $350,000, would you be selling it? If you needed the money you may have to accept a lower price but if you could afford to hold on, you may well keep the house until markets improve. Investments, including shares or managed funds, work in the same way.

When will the current downturn in the share-market end?

If we knew the answer to that question, we would be very rich. Unfortunately we don’t know when the current downturn will end and the share-market has gone through a number of cycles. In every case where the market has fallen it has gone on to achieve new heights in the months and years that follow. There is nothing to suggest that this cycle will be any different. Patience is a virtue!

My savings are being eroded as a result of the fall in the share-market, how will this affect my retirement plans?

As a result of the current downturn in the markets, many investors have seen the value of their investments fall. Provided the investor remains invested and doesn’t crystallize their losses by selling down their investments, then they should recover in time. In some cases, and where flexibility exists, some people may decide to defer their retirement until investment markets improve, or may decided to work part time for a while in order for their retirement savings to recover.  Many people suggest that when we reach retirement age we should….

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