5 INVESTMENT TIPS FOR 2022

Author: Kieran O’Dywer, Senior Financial Adviser

As published in the Surf Coast and Geelong Times, Thursday 10 February 2022.

Most of the time share markets are calm and don’t make the headlines. But every so often they have a tumble and make the “front page” with headlines.

In my career, I have seen many market falls, and so it is again – with share markets starting the year on a sour note.

From their highs, US shares have fallen 8%, with the tech heavy Nasdaq down 14%, and Australian shares are also down 7% at the end of January.   

What’s driving the recent drop in share markets?

Share markets have fallen in recent weeks on the back of worries about inflation, rising interest rates, the Omicron disruption and the risk of a Russian invasion of Ukraine.

What should I do with my investments in 2022?

From the point of basic investment principles, it’s hard to say anything new. So, apologies if you have heard this advice before, but at times like this it is worth reiterating.  Here are my five tips for better investing in 2022:

1. Don’t panic.  While they all have different triggers and unfold differently, periodic share market corrections of the order of 5%, 15% and even 20% are normal.  But while share market pullbacks can be painful, they are healthy as they help limit complacency and excessive risk taking.
2. Short term forecasting is fraught with difficulty and should not be the basis for a long-term investment strategy. However, right now, while inflation and worries about rising interest rates are concerning, it seems premature to expect a US, global or Australian recession.
3. Selling shares or switching to a more conservative investment strategy whenever shares suffer a setback just turns a paper loss into a real loss with little hope of recovering.
4. Australian shares are offering a very attractive dividend yield compared to bank deposits. Companies don’t like to cut their dividends, so the income flow you are receiving from a well-diversified portfolio of shares is likely to remain attractive.
5. Finally, turn down the noise. At times like the present, the flow of negative news reaches fever pitch – and this is being accentuated by the growth of social media. Talk of share market “crashes” help generate clicks. But such headlines are often overblown. We are never told of the billions that market rebounds and the rising long-term trend in share prices adds to portfolio values.  The media has pretty quickly forgotten the fact Australian shares (ASX300) grew by 17.5% last year.

Over 30 years we’ve developed a disciplined process for steadying the ship in rough seas.

If you would like to learn how the Muirfield team can help, we have offices in Geelong and the Surf Coast and pride ourselves on being easy to reach on (03) 5224 2700.