New announcement. Learn more

Blog Articles

NvidiaMillieAIRPAAgingJewelleryScam investmentInvestment fraudInvestment fraudsScamsCyclonesFloodingInsurance premiumsInvestment managerArtesianOrgans on a chipManaging household moneyCouplesTravel insuranceTravel cardTravelPlastic WasteStewartCollaborative engagementBest Ethical Financial AdviserAwardHuman skinCrash test dummyAkzo NobelBieresdorfUnileverThe 3 R'sAnimal crueltyAnimal testingSyndicated propertyWholesale investorBreast cancer, mammogramGender diversityDiversity40:40 vision30% clubFemale leadersOutlookIndicatorsRecessionFossil FuelsWomenChildrenCyberVisaMagellanDEIDiversity, equality and inclusionGHG emissionsNet ZeroNorway Oil FundEngagementActive EngagementWealth protectionPasswordsBank of mum and dadBank loansBull marketReparationsVolunteeringB-corpGarden festivalCompensationClimate changeBuilding portfolioPortfolioBusiness as a force for goodB corpFinologyNanukPlasticPackagingEsg investingFear of missing outConfirmation biasBehavioural financeRetirement villageEsg ratingsSustainableWalking the talkProxy votingVotingAwardsBear marketEthical preferencesIndependent informationGreenwashingNastiesGMODonationsMindful MoneyRIAAWarEthicsAuctionImpact InvestingCyber securitySustainable InvestingResponsible InvestingMarketTimingCoronavirusCovidAiaCignaEthical investingEsgEnvironmentActivePassiveEPAProperty Relationship ActTax returnWearable DeviceArtificial IntelligenceUnderwritingDNA TestingGenetic TestDe Minimis ExemptionFair Dividend TaxForeign Investment FundTax ratesKiwiSaver feesChinaBrightline TestEQCAdvice FeesInvestment feesJunk InsuranceWarrantiesConsumer Guarantees ActRetirement IncomeNew Zealand SuperannuationBridgesFitness CoachingWellnessSally MellorInvestment PropertyTenantLandlordRental PropertyCar RentalCar InsuranceRelationship BreakupProvisional TaxBeanyAccountingTrust DeedBeneficiaryTrust ActTrustSkin cancerProstate cancerMelanomaLung cancerCervical cancerCancer mythsFirst home buyerOpinionFactsSwindlerScamTreasuryVolatilityDollar cost averagingFamily trustsResearchMilfordInvestor confidenceFMAInvestment assumptionsTerm depositsKiwisaver monitoringKiwisaver comparisonStress freeHolidaySecurityBanksTax refundRiskReturnInvestingGreedFinance companiesContents insuranceOwing moneyCredit cardCredit cardsPropertyExpertsBubblesBorrowingLendingFloatFixMortgageLoansInterest ratesFinanceBrokingLegislationForeign superWordingOmbudsmanHouseCoverContentsBalanced fundSchooling costsEducationCredit ratingsTradingSecondary marketTerminologyFixed interest investmentFixed InterestLegalGuarantorUk pensionPension transferSpendingChristmasConsumer behaviourUK Pension TransfersQROPsInvesmtentWays to dieInsurance claimsWinz#residential care#assetsTrustsResidential care subsidy#residentialcaresubsidy#gifting#familytrustsSavingsLottery#bonusbondsSpecific injuryCase stuffyTrust expensesEstate planningAsset protection#trust#family Trust#incomeprotectioninsurance#incomeAdriennes storyQuizLife expectancyLVR ratioHouse depositBorrowing to buy a house#firsthomebuyerKiwisaver returns#kiwisaver feesReitrement savingsFirst home buyersUncategorized#financialplanningPersonal financesFinancial management#personalfinances#mortgages#finances#fidelity#kiwisaverperformance#redundancy insurance#incomeinsuranceRetirement ageJohn KeyFirst home buyer withdrawalKiwisaver rulesFirst home buyer grantUnclaimed moneyMoney refundsPortability superBringing home KiwiSaver#australia KiwiSaverInsurance #insurance#homeinsurance#liability#insurance claim. Insurance claim#income insurance protectionFirst home grantDumb ways to dieUnder 18 years oldTax creditTrans-tasmanPortabilityAustraliaAsteronRisk profilesMoving funds#changing kiwisaver managersInvestment returnsTibTerminal illness benefit#claim#sil#kiwisaver analysis#shares#mighty river power#electricity#partners lifeTrusteeSafety of KiwiSaverFunBeerCredit ratingBad debtTax rebateInvestment advice#retirement planningLapseExpensesFighting fundEmergency cashRipping off elderlyFinancial planingPass backUnit pricingGareth morgan#Medical Assurance Society#MAS#investment analysis#travel insurance#insurance claimFinancial planningBudgettingReporting#insurance commissionInsurance commissions#commissions#career in insuranceSouthern crossClaimingInsurance excessesRussiaJohn clarkeHumourGfcCyprusHome insuranceEarthquakesCrisisStand down periodPolicy wordingChurningContributions holidayTaxesPayrollEmployer contributionsEsctEmployee contributionContribution holidaySil kiwisaver. westpacKwiisaverBitAsset allocationAsbAnzAwarenessReturnsPerformanceProstate canerWillsRelationship PropertyPlanningLegal AgreementsLawyersDivorcePremiumsTowerFund ManagersFisherKiwibankDefault schemesBnzAMPPetsPet insuranceMoney managementBudgetsHouse insuranceFire and general insuranceAccChilds trauma insuranceChilds traumaProtectionFund managerClaim trauma insuranceTotal and Permanent Disablement InsuranceOnePath LifeClaimsSmokingSmokers ratesInsurance researchInsurance analysisImageFree quotesSavingMoneyInfographicInflationVideoTpd insuranceTPDSovereignDisabilityCase StudyAxaHeart attackLoveIncome protectionCancer insuranceBreast cancerTerranovaMinimum wageEmployer contributionTraumaIncome protection insuranceCancerSortedRisk profileRetirementOnepathInvestmentsWestpacBTWho can joinRetirement savingsFuneral plannerFuneralDyingDeathTrauma insuranceLife InsuranceInsurance News & ViewsInsuranceIncome insuranceHealth insuranceDisability insuranceUS citizenRetiring to live in new zealandInvestmentFATCAReturning to new zealandRetiring in new zealandMember tax creditKickstartTransitional residentTaxationRetiring to new zealandNew migratnFifFdrDe minimisSuperannuationRetiringNZ superannuationNew zealandEligibility for NZ SuperMorningstarInvestment ReturnInvestment performanceFund sizeFeesTaxPIRPIEMoney News & ViewsIrdMinimum contributionKiwiSaver News & ViewsKiwiSaverContributions1 April 2013

Volatility and your investment portfolio

The last four weeks have seen volatility in international and New Zealand investment markets.  Markets have been increasing and decreasing in value from one day to the next.

The triggers for these recent market changes have included 1. The Chinese share-market fall, slow down in economic growth and changes to its currency settings 2. The anticipation of the Federal Reserve in the USA increasing the Federal Reserve Rate (interest rate) 3. Australia's economy continuing to stumble 4. Good and then bad economic indicators being released in the USA and other markets.

Other factors that impact the New Zealand sharemarket include the level of our exchange rate, the milk price and the Official Cash Rate level.

We have been telling our clients for the last year or so that we have been anticipating a correction in the markets.  We didn't know when, we didn't know by how much.  We also now don't know whether this current volatility and fall in valuations will continue for 1 week, or 6 months.  We don't know whether it will go up or down next week.

This volatility means that our clients returns have reduced, but are still strongly positive.

Dollar Cost Averaging

The important things are that this is NORMAL and this is why we encourage our clients to 'dollar cost average'.  This means that when you are adding funds to your portfolio, you do this little bit by little bit and when you are drawing down funds you take them out little bit by little bit.  What this means is that might buy (or sell) with some of your funds when the market is high and then it reduces, but when there is volatility, your next purchase (or sale) might be when the markets are lower.  This is a practice that we have recommended to our clients for many years and it smoothes out the impact of volatility on your investment portfolio.

What should you expect over your life-time of investing?

At a recent conference, I was reminded of an easy way to help you to understand what to expect in relation to the volatility on your investment portfolio.  We all hate seeing negative returns on our portfolio, but all investments strategies have the potential to have a negative return (including investing in the bank, as the funds are highly unlikely to keep up with inflation, so will be going backwards in terms of your 'purchasing power' or 'real' value).

You may have seen the information from Morningstar Research that shows your likelihood of getting a negative return on your investments.  This depends on what your risk profile is.  But, while this information is accurate, it is hard for most people to understand in day to day terms.  So, I have converted this information into the likelihood that you are going to have a negative return in any year for you.

Based on the Morningstar assumptions you should note that this is the likelihood that you will have a NEGATIVE return in any year based on your risk profile:

Please note that this doesn’t mean that every 5 years you will have a negative return.  You could have two negative years in a row and none for 10 years after that, as an example

Risk ProfileDefensive (Conservative MSTAR)Conservative (Moderate MSTAR)BalancedGrowthAggressive
Expected probability of a negative return over any single year %




You should anticipate a negative year every

29 years

14 years6.8 years5 years

4 years

Forecast Range of Return (at a 99% confidence interval)
Risk ProfileDefensive (Conservative MSTAR)Conservative (Moderate MSTAR)BalancedGrowthAggressive
1 year

-2.4 to 13.9

-4.9 to 17.5-10.2 to 24.3-15.9 to 31.4

-20.5  to 37.1

5 years

2.1 to 9.4

1.3 to 11.3-0.7 to 14.7-4.6 to 21.2

-4.6 to 21.2

10 years

3.2 to 8.3

2.8 to 9.91.6 to 12.5-0.8 to 17.4

-0.8 to 17.4


If you have any questions about this information, please don't hesitate to contact us by emailing your adviser at, or


If you have any thoughts or opinions that you would like to share, visit us at our Twitter, Facebook or Linked In pages, and comment.


This product has been added to your cart