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Navigating uncertain markets:

3 things you can do in a volatile market

In last month’s blog, Navigate senior adviser Rory D’Agostino discussed some of the current events which have caused market volatility in 2022.

In times of instability, such as the present, it can be difficult for people to take decisive action and move forwards with a solid investment strategy. While it is true nobody can predict the exact behaviour of the market, being equipped with the correct knowledge can help to insure your investments
against risks.

Poor timing and emotional reactions are common factors which can cause investors to lose money.
Here are three strategies you can follow to reduce the influence of either factor upon your investments, so that you can increase your chances of earning more consistent returns over time.

Dollar cost averaging

Dollar cost averaging (DCA) is an investment strategy where the investor invests their funds throughout a particular period of time in order to reduce the timing risk and volatility on the overall purchase, therefore hedging the risk.

In simple terms, DCA takes the emotion out of the investment by purchasing the same asset multiple times. For example, you plan to invest $1,200 in a certain share. You can either invest all your money at once and hope it is a good month or invest $100 per month and hedge your risk.

12-month example of dollar cost averaging

Month Share Price Number of Shares Purchased

Maintain your discipline

Make sure that you keep your eyes focused on the prize, rather than on the short term. Moving in and out of the market may have a negative impact in your portfolio performance. The drivers for the negative impact of getting in and out are:

  • Extra costs (Capital gain tax, brokerage)
  • Missing out on the opportunities that often follow a market downturn

Opportunities often follow market downturns

Return (%) Return in following year (%) Average return for next 5 years (%)
1974 (Oil embargo)
1981 (Double-digit inflation)
1990 (Gulf war)
2002 (Tech wreck)
2008 (Financial crisis)
2011 (Eurozone debt crisis)

Based on returns of the S&P/TSX Composite Total Return Index.


You have probably heard the following saying “don’t put all your eggs in one basket” and that is because when it comes to investing your hard-earned money it is crucial to have a diversified portfolio as diversification lowers your portfolio’s risk because different asset classes do well at different times.

Diversification into different asset classes is important for accumulators and retirees alike. If one business, sector or asset class fails or performs badly over a period of time, you won’t lose all your money. Having a variety of investments with different risks will balance out the overall risk of a portfolio which should be in line with the individuals risk tolerance and personal objectives.

In conclusion, apart from those mentioned above, there are many different strategies you can follow to mitigate risk to your portfolio during a volatile market. There is no single best approach, since which strategies you adopt will depend on your risk tolerance. That’s why as a first step it can be helpful for you financial advisor to assist you in identifying your personal risk tolerance. After your strategy has been put into place, your financial advisor will also be able to monitor your investments, adjusting them depending on their performance to help you reach your financial goals.

Contact one of the team at Navigate Financial Group who are here to support your financial decision making to lead you confidently into your financial future.

References/ footnotes:



Disclaimer: This article contains information that is general in nature. It does not take into account the objectives, financial situation or needs of any particular person.
You need to consider your financial situation and needs before making any decisions based on this information.