The best market strategy - learn from the experts!

The year 2016 was full of surprises. From the shock Brexit decision in the UK to the equally unexpected (if you listen to the media) election of Donald Trump.

Both events were heavily covered by the media in the lead up, and most outlets – and even experts – forecast significant impacts to the world markets.

It can be concerning to hear these messages. You might have been thinking ‘should I change which fund my KiwiSaver savings are invested in?’ or ‘is my investment safe?’… or you may have even switched funds.

However, history has shown that while it’s tempting to try and ‘time the markets’, it’s a risky game to play. Many experts believe that ‘time in the market’ is the most important factor when it comes to investing.  

Market timing is where you try to predict changes in the markets and adjust your investment strategy accordingly. For example, changing from a high risk fund (such as a growth fund) to a lower risk fund (such as a conservative fund) if you think an event might negatively influence markets. The downside to this strategy is that short-term fluctuations in markets are very difficult to predict and, more often than not, you’ll end up out of pocket.

Time in the market is the opposite approach. This strategy focuses on the long term nature of investments and riding out the natural cycles – both the ups and the downs – while staying put in your chosen fund. These ups and downs are commonly referred to as ‘investment market volatility’ and are an expected part of investing.


If we come back to the Brexit and Trump examples, we can see the downside of trying to predict the markets. With Brexit, some share markets did fall, however they then recovered and the impact was minimal. Investors who changed their fund did so for no benefit… and in the long run it could cost them if they stay invested in a more conservative fund. With Trump, the share markets did the opposite to what the media had been predicting… so investors who changed their fund would have missed out.

So what should you do?

The best approach is to make sure you’re invested in a fund that suits your investment objectives, timeframe and risk/return profile from the outset. Then you can be confident in your choice and comfortable with the level of risk you’re taking – despite what may be happening in the markets in the short term. 

The good news is we have a quick online tool to help you work out which fund is right for you. And it’s easy to change your fund if needed – find out more on our website.

While it’s easy to take a ‘set and forget’ approach, it’s best practice to review your fund choice when your personal circumstances or investment objectives change to ensure you remain invested the right fund. 

If you need more help deciding which fund is right for you, we have a team of experts available who can provide personalised financial advice, free of charge.

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Published January 2017

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