Weathering financial storms

Life’s good. You’ve just landed a great new client account at work, little Johnny picked up a leadership award at his Primary School and your investment portfolio seems to be tracking along nicely. Even that gruelling exercise regime is finally starting to pay off – down three kilos for the month – Woohoo!

Then BAM! A crisis hits.

You wake up bleary-eyed to breakfast show anchors and talking heads on current affairs segments babbling about an unforeseen event that’s sent global markets into a tailspin. “Bloodbath on Wall Street!” the headlines cry. “Local markets plummet!”

Your stomach churns, there’s tightening in your chest and you can literally feel the perspiration beginning to bead on your forehead. Are you and your investment portfolio ready for a ride on a financial rollercoaster?

The problem with unforeseen circumstances it that they are just that… unforeseen. Markets can be volatile and all manner of global events can cause disruption. It’s unsettling, but we can be smart and prepare ourselves to weather the harshest financial storms.

Firstly, don’t panic!

When investors see tens billions of dollars being wiped from the local bourse as equity prices plummet or feel like the bottom is falling out of the housing market, the natural response for many is to push the panic button and sell. This emotional reaction is driven by fear of loss and often the opposite of what needs to be done. If you’ve been selective in your portfolio, sought good advice and taken some protective measures, it’s likely you’ll be better placed to absorb a market correction and any short-term losses will be recovered in time. In fact, “crash” scenarios can create new opportunities to invest at cheaper prices.

As an example, between 5 and 6 February 2018, the ASX 200 followed a catastrophic lead from Wall Street that resulted in the local stock market losing over $90 billion in value in two days, with no sector spared from the carnage. However, fast forward several months and we now see the All Ordinaries back at its pre-crash level of 6121 points. All markets are cyclical. Sometimes it could be best to just hold on tight, keep a cool head and remain confident that you can handle whatever the twists and turns the listed market takes.

Grandma was onto something. When that rainy day arrives…

We’ve all heard the expression “Save it for a rainy day.” It’s usually scrawled inside a birthday card from Grandma with a well-worn $20 note lovingly stuffed in it. It turns out Grandma was onto something. Removing it from this innocent context, the ‘rainy day’ reference is a shrewd call-to-action to keep a sum of money aside to negotiate the stormy seas of a personal financial crisis should the dark clouds ever gather.

A downturn in the markets, sudden illness, or loss of employment are all possible reasons why you might need to call on your emergency funds. To ward off financial catastrophe, it’s important to have savings at your disposal to sustain you and your family. If you don’t have much of a safety net at the moment, it’s never too late to start planning ahead. In any financial crisis, cash is king, so it can be worthwhile making sure there is something in your cookie jar for your time of need.

 Diversify your investments

Diversification is an important element to any investment portfolio. Of course, as with all investments, there is no guarantee against loss. More financial services professionals could argue that by diversifying your portfolio, you can reduce your exposure should the economy take a turn and start heading south. By spreading your investment dollar across a number of different financial instruments and asset classes that react differently to an economic or financial event, you could minimise risks and offset the impact a financial storm could have on your portfolio as a collective. Investing is one area you may not want to have all your eggs in one basket.

There are many different products and investment vehicles out there to choose from. Cash, property, shares, bonds, commodities and managed funds can all form part of an investment portfolio. For those who have an appropriate risk appetite, a mortgage trust may be appealing.

A mortgage trust, such as the Trilogy Monthly Income Trust, allows investors to pool together money to loan to developers for residential, commercial or industrial property developments. These loans are secured by first mortgages and the interest collected on these loans is distributed to investors each month.

While there is no guarantee to the consistency of returns to our investors and there are certainly risks involved in investing, historically, irrespective of the economic storms brewing away in the background, the Trilogy Monthly Income Trust has returned 7.85%p.a. (over the last five years) net of management fees and costs. By delivering investors an income distribution each month since inception in 2007, the Trust has withstood both the test of time and various market conditions.

When it comes to weathering financial storms, or making an investment decision, be sure to do your research and consider engaging a Financial Adviser to help you along your financial journey.

Learn more about the Trilogy Monthly Income Trust or chat to our Investor Relations Team today to discuss how Trilogy can meet your investment needs.

This article has been prepared by Trilogy Funds Management Limited (Trilogy) ABN 59 080 383 679 AFSL 261425 as responsible entity and issuer of Units for the Trilogy Monthly Income Trust (Trust) (ARSN 121 846 722). Trilogy has issued a Product Disclosure Statement for the Trust 1 September 2017 which is available at or by contacting us.  Applications will only be accepted on the current application form that accompanies the PDS. You should obtain a copy, understand the risks, and seek personal advice from a licensed Financial Adviser before investing. Investment in the Trust is subject to terms and conditions, and risks which are disclosed in the PDS. These risks include the risk of losing income or principal invested. The Trust is not a bank deposit and Trilogy does not guarantee its performance. Any information provided by Trilogy is general information only and does not consider your objectives, financial situation, or needs. Past performance is not a reliable indicator of future performance.

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