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Is Now the Time to Run for the Hills?

The TAXCHIC’s two bobs worth on the current stock market…

Any good Adviser worth his salt will give you the short answer – No!

For the long answer, grab a cuppa and read on…

As we slide our way into 2019, the 10-year bull market continues its long run which can be a trap for young players. It’s a common move for many investors, especially first-timers, to get caught up in the hype, follow the herd and start to sell down even though we’ve had good solid returns. This is because the current investment environment is unique, extraordinary even; and to be honest unseen. Everyone is nervous given prices are currently inflated across all asset classes together with risk in the global market looking high.

So we sell then, I hear you say… No, we don’t. Has the TAXCHIC gone crazy? Nope – we buy! Or rather, get ready to buy soon. This is to take advantage of any opportunities as they present.

While I don’t recommend selling in the current inflated market and yes, I know you all still think I’ve gone crazy… I do strongly recommend a re-balance to ensure you aren’t holding too much risk. This is important especially if you are getting close to retirement age. And by close I mean within the next 5-7 years as you don’t have available time in the market on your side to recover. And recover it always does.

If you’re younger, you have plenty of time left in the market and nothing to stress about so I’m generally never concerned with your exposure as long as you have a well-balanced portfolio.


1. Now is not the time to run for the hills, it’s the opposite – get yourself ready to buy! Talk to your Financial Adviser and get organised.

2. Diversification across asset classes is crucial when investing your hard-earned cash regardless of market conditions, but especially at the end of a long bull market.

3. Is staying in cash a good idea? Cash is generally never a good investment unless you’re close to retirement, wary of the stock market or you need immediate liquidity. But honestly, there are always good defensive funds available.

4. In this market, it’s all about controlling the risk and exposure... Don’t have a mass sell-off, but instead ensure you’re not left exposed when we do see this market correction.

5. If you’re nearing retirement, make sure your risk profile on your superannuation is not growth, high growth or aggressive. Seek advice to ensure your investments are suitable.


TAXCHIC does not endorse or recommend margin lending ever - I don’t like it. Never have and never will. If you have margin lending within your portfolio (I know these are usually set up by your bank advisers and you really don’t quite understand what your money is invested in), you should be concerned, really concerned and I urge you to get a second opinion immediately.

These are not the market conditions for such an aggressive strategy and you could face potential margin calls. Translation - this would be very bad news, potentially a second mortgage on your house and a lot of unnecessary stress and worry. You certainly don't want this kind of exposure if you're nearing retirement or already retired.

Taxchics golden rule for stocks - NEVER borrow or use money you don't have to buy shares unless they are capital protected!

Now, I know some people have done quite well off leveraged investments but is the risk really worth it? I don’t think so.

Feeling lost? I know it’s complicated, overly complicated for most but please be smart, exercise due caution and diligence and be sure to get good personally tailored advice from a qualified Independent Financial Adviser who is all about strategy and not product. Usually, they’re the type who don’t advertise or offer stuff for free.

My last piece of advice for today - make sure your Adviser can explain your strategy simply. If they can't explain a complex strategy with ease, they don't sufficiently know what they're talking about.

Vanessa Mendes and Hocking Mendes Unit Trust T/A HM Financial Partners are Authorised Representatives of Sentry Financial Services Pty Ltd AFSL 286786. The information contained in this article is of a general nature only and does not constitute personal advice. You should not act on any recommendation without considering your personal needs, circumstances and objectives. We recommend you obtain professional financial advice specific to your circumstances.

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