Seven fintech leaders weigh in on market volatility for 2022
With a return for the US S&P 500 of +18% in 2020, an even stronger +26.9% in 2021, and powerful trends of volatility set to continue in 2022, it is hard to know what to expect and how to invest. Sharesight asked seven leaders from the fintech industry their advice on how best to succeed in an unpredictable market.
Sharesight is the premium portfolio tracker on the market for Australian investors, automating portfolio tracking so investors can spend less time on tedious portfolio admin and more time making investment decisions. Always at the vanguard of simplifying investments, Sharesight spoke to seven fintech leaders about everything from trends in 2022, to what investors should be cautious of in the new year and the impact of technology on DIY investment.
With the “taboo” around investing falling away and an increase in technology and apps in the investment space, new investors abound in 2022. Sharesight’s experts recommend the best advice for new investors is to be aware of the volatility of the market, thoroughly research your investments and to stick to investing over the long term. Andy Rogers, Director of Stockbroking, CMC Markets Invest recommends new investors can safeguard against market volatility if they “review the strategies they can put in place that will mitigate risk and help to minimise the impact volatility has on their portfolio”. CEO and Co-Founder of PocketSmith, Jason Leoung suggests investors go back to basics and understand the mechanics behind your investments, “Start with small steps and take the time to understand your investment personality, risk appetite, and what values are important to you.”
With the last few years seeing an explosion in new investment products such as ETFs, SPACs, cryptocurrency and NFTs, are these trends set to continue? And what other trends are predicted for 2022? According to industry leaders these trendy investments will continue to pop up while other key trends will include: an increase in investments being made through apps by millennials and Gen Xers; sustainable investments in companies with “green credentials”; and people managing their own portfolios. Mark LaMonica, Individual Investor, Product Manager and Co-host of Morningstar Australia’s Investing Compass podcast advises however, that “many great investors that enjoyed success stayed clear of trendy investments”.
Sharesight’s experts also looked at the impact of technology on DIY investors in the year ahead. Pat Garrett, Co-CEO and Co-Founder of Six Park suggests that “technology will continue to help you simplify and more efficiently manage your DIY investment activities so you can invest wisely”. This automation of investment can help investors take the emotion out of trading while the accessibility of new technology will allow more people to begin investing than ever before. David McEwen, Founder and Lead Analyst of Stockfox also indicated that apps are the way forward for investing in 2022 with “the increased convenience factor from being able to trade quickly and cheaply from your phone means people are rapidly adopting fintech apps”. And the growth of fintech apps in turn will drive the growth of value added apps like Sharesight.
With the market trending up over the past two years, it’s prudent to be wary of being too optimistic, and investors are wondering what to look out for in 2022. Experts suggest that new investors should be prepared for market correction to occur in the new year. This is a natural part of investing, and tools such as dollar-cost averaging can help take the emotion out of investing. With easy money and low interest rates making it harder for markets to continue to rise at the same rate they have been, Brooke Roberts, Co-Founder of Sharesies suggests that regardless of the hype around a product, new investors shouldn’t be dazzled but rather, “consider the key attributes and risks for each investment”.
Sharesight’s CEO, Doug Morris echoed the experts’ sentiments about volatility in the market and the importance of knowing your portfolio, suggesting that, “After a strong 2021, investors should be mindful of the potential for volatility to affect markets, and prepare for what this may mean for their portfolio by looking at their asset allocation and diversification with tools like Sharesight.”
Read more expert advice of what’s ahead in 2022 here.
