3 ways to deal with market volatility

MPF is a long-term protection that helps you achieve retirement goals. You should not worry too much even if the market conditions have fluctuated.

Imagine you are 30 years old today and you can only withdraw the accrued benefits at the age of 65, you may not need to change your investment strategy solely because of short-term fluctuation in the market. Equity funds are often able to generate a more decent return than bond funds and money market funds in the long run. When the investment return is compounded continuously, you will see a substantial difference.

Generally, different age groups would have different investment strategies.  If you are young today and can afford more risks, you may choose to invest in a riskier asset class such as equity funds for long-term growth. However, when you get closer to your retirement age (in coming 3 to 5 years), you may have less time to recover from the market fluctuations and losses brought along with investing in risk assets.

Furthermore, MPF contributions are making on regular basis. Hence, the “Dollar-Cost Averaging” strategy has always been applying to your MPF investment.  “Dollar-Cost Averaging” is a simple investment strategy that calls for investing the same amount of money on a consistent basis.  When unit price is low, the same amount buys more units. That can spread the cost basis out at different prices in the long run, which would help mitigate the impact of the short-term volatility to your investment portfolio.

Last but not least, seek your financial adviser/consultant for more professional advice.

 

Investment involves risks. This information is for general reference only.

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