I’ve recently received several calls from clients concerned about market volatility and the impact of the current political environment on their portfolios and retirement savings. With Trump returning to office in the US, a wave of policy announcements has sparked discussion, some with significant economic implications.

Having guided clients through the tech bubble of 2000, the Global Financial Crisis in 2008, and the pandemic in 2020, I understand that periods of uncertainty are nothing new. While these moments can feel unsettling, history shows that markets endure and recover over time.

For those seeking guidance, here are the key points I’ve been sharing:

Markets fluctuate daily, and the media thrives on sensational headlines that can trigger emotional decision-making. The recent US election has amplified this trend, with dramatic stories designed to drive clicks and views. Good investing isn’t reactive – patience and discipline are always rewarded over time. If your investment horizon is 10+ years, reacting to short-term noise simply doesn’t make sense.

Despite short-term fluctuations, markets have delivered exceptional long-term growth. Over the past decade, a $10,000 investment in Australian shares (ASX 300) has more than doubled, while global shares (MSCI World Index) have risen over 200%, and US shares (S&P 500) have surged over 300%. These gains have occurred despite a pandemic, soaring inflation, rising interest rates, and the largest military conflict in Europe since WWII. Market pullbacks are a natural part of the cycle.

With new tariffs and the potential for trade tensions, predicting which asset classes or sectors will be impacted is challenging. Increased volatility is expected, making a well-diversified portfolio more important than ever. A mix of asset classes helps ensure that no single downturn has a devastating effect – after all, putting all your eggs in one basket has never been a sound strategy.

Inflation and interest rates are key drivers of market movements. The recent 0.25% rate cut, the first in five years, signals a potential shift, but whether further cuts come sooner or later will depend on inflation staying within the RBA’s target range of 2-3%. The graph below shows long-term inflation rates, with the recent spike in inflation seemingly under control for the time being. You can see RBA’s long-term inflation data here: https://www.rba.gov.au/monetary-policy/about.html

Holding shares and property comes with ups and downs, but the trade-off is protection against inflation over the long term. Consider this: a $1,000 purchase in 2004 would now require $1,716, and in 1994, that same purchase would cost $2,232 today. While holding cash may feel safe in the short term, inflation steadily erodes purchasing power.

Try the RBA’s inflation calculator: https://www.rba.gov.au/calculator/

Successful investing requires a long-term perspective. Don’t let short-term noise derail your strategy – stay the course.

If you have any questions about your portfolio or financial goals, I’m here to help. Please feel free to call or email to schedule a time to chat.