Market weakness may provide buying opportunities

Fear and panic selling may cause stock prices to fall below their fair values in the short term. This provides opportunities for unit trust funds to accumulate quality stocks which are trading at attractive valuations. Hence, investors should consider investing during periods of market weakness to capitalise on such buying opportunities.

Practise Ringgit Cost Averaging to ride through short-term volatility

Emotions can lead to poor investment decisions such as buying high and selling low. Instead, investors should practise Ringgit Cost Averaging (RCA), which involves buying a fixed amount of unit trust investments on a regular basis. The RCA approach helps investors to remain disciplined in investing for their long-term financial goals and removes the emotional component when investing during markets' highs and lows. More importantly, investors will stay invested to benefit from potential future gains in the financial markets as well as the compounding effect of their investments in the long run.

Markets revert closer to fundamentals over the long term

Over the longer-term period, markets tend to eventually normalise to reflect the underlying economic and corporate fundamentals. Investors who invest during markets' lows will likely benefit from the markets' subsequent recoveries.

The S&P 500 chart above shows that the U.S. market rebounded from negative event / setback, and it is usually the early part of the rebound that generates the best gains. Therefore, it is crucial that investors practise RCA to stay invested so as to participate in market rebounds.