It may seem like the world is currently full of uncertainty and tension – maybe even a bit unsettling. Geopolitical risks are high, global conflicts are increasing, and political shifts in the US, including “America First” policies and renewed trade tensions, are disrupting long-standing alliances and global trade agreements. In response, many countries – including Australia – are spending more on defence than ever before.

So, is now really a good time to invest in assets that might be exposed to these risks? Perhaps it would be safer to wait until things settle down – maybe after the next US election, when a more predictable administration could emerge. It’s a fair question.

But when it comes to investing, long-term thinking usually outperforms short-term reaction. So let’s look at why that is – and how staying the course can often be the smarter strategy.

Markets are emotional – and unpredictable in the short term

While company fundamentals and economic data drive long-term value, short-term market movements are often driven by emotion – namely fear and greed. For new investors, it might seem logical to act on these movements: buy on good news, sell on bad. But in reality, this reactionary approach rarely delivers consistent results.

That’s because news often causes broad sell-offs or rallies that aren’t always tied to the true value of underlying assets. Companies that aren’t even affected by global events can see their prices drop – only to rebound the next day. Attempting to predict or “time” these movements can be psychologically draining and financially damaging.

Timing the market is a tough ask

There’s a reason the saying goes: “It’s time in the market, not timing the market, that builds wealth.” As Warren Buffett famously said, “The market is a medium of exchange from impatient people to patient people.”

Markets are forward-looking – often pricing in events six months ahead of the real economy. So, even if you’re waiting for a clear signal that “the worst is over,” the market may have already rebounded. To time the market successfully, you need to be right twice – once when you exit, and again when you re-enter. That’s a high bar for anyone.

Volatility is the price of long-term returns

As John Templeton said, “Markets climb a wall of worry.” There’s always something to be concerned about – inflation, interest rates, political instability or global events. But short-term volatility is part of the cost of achieving long-term growth.

In fact, staying invested can make a substantial difference. Between 2003 and 2022, the ASX delivered an average annual return of 9.8%. But if you missed just the 10 best days over that period, your return dropped to 5.6%. Miss the 20 best days, and your return fell to just 2.9%.

Every crisis feels unique – but the market endures

It’s natural to feel like each crisis is unprecedented. Whether it’s a global financial meltdown, a pandemic or political turmoil, there’s often no clear path forward. But markets are resilient. Look at a 100-year chart of the ASX and you’ll see a clear long-term upward trend – despite regular corrections and periodic crises.

That’s why a long-term investment strategy – especially one grounded in professional financial advice – can help investors ride out the noise and avoid costly decisions based on fear.

Practical strategies for investing through uncertainty

There are ways to reduce risk and stay invested, even during volatile times. These include:

• Bucketing strategies – segmenting short-term and long-term investments to protect immediate needs while maintaining market exposure.
• Active asset allocation – adjusting your portfolio to reflect evolving risks and opportunities.
• Diversification – spreading investments across sectors, geographies and asset classes.
• Currency hedging and trend analysis – managing exposure to global factors and identifying emerging opportunities.

A trusted adviser can also help keep you focused, provide perspective and ensure your investments remain aligned with your financial goals.

So, is now a good or bad time to invest?

In short – no one knows for sure. We’ll only know when we look back in hindsight. But as the old proverb says: “The best time to plant a tree was 20 years ago. The second-best time is now.”

Rather than trying to pick the perfect entry point, many investors benefit more from a consistent, long-term approach that reflects their goals, timeline and risk tolerance.

Need help with your investment strategy?

At LDB, we help individuals, families and business owners navigate market uncertainty and invest with confidence. From retirement planning and portfolio management to tailored investment advice, our experienced team is here to support your financial journey – in any market conditions.

Contact us today to speak with an investment adviser and explore how a long-term approach could benefit you.
Call (03) 9875 2900 or get in touch online