Volatility is a normal part of long – term investing

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Share market volatility is very normal, and from time to time there is inevitably volatility in markets as investors react nervously to changes in the economic, political and corporate environment.

Above all else, financial markets and investors dislike uncertainty.

Yet markets are also prone to over-react to events that cloud the short-term outlook. As an investor, it is important to take a step back at these times and keep an open mindset. When we are prepared at the outset for episodes of volatility on the investing journey, we are less likely to be surprised when they happen, and more likely to react rationally.

By having an open mindset and a longer-term investment perspective that accepts short-term volatility, investors can begin to take a more dispassionate view. Not only does this help with the job of staying focused on long-term investment goals, it also allows investors to begin to exploit lower prices rather than lock in losses by emotionally selling at lower prices.

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