I must confess, it has been a challenging time for share investors, with prices falling across the board – both here and overseas – as tariffs and the war in the Ukraine dominate the news. But as unsettling as it may be, we need to accept that volatility is the price we pay for the liquidity of shares.

Keep in mind that over the past 120 years, the Australian All Ordinaries Index has delivered an average return of around 9% per year, including both income and growth. There are good years and bad years, but history tells us that markets tend to produce six strong years and four weaker ones in every decade. The secret is to hang in there.



Warren Buffett often uses a farm analogy to explain how investors should approach stock market volatility. ‘If you owned a farm and your neighbour came by every day offering to buy it at wildly different prices, you wouldn’t sell it cheap just because he was in a bad mood, nor would you think it’s worth a fortune just because he’s overly excited one day.’

Just this week, a reader wrote to me, asking why I always seem to be writing about how good shares are and never mention investment property. In her view, shares are risky, whereas investment property provides a very stable portfolio. I can understand her thinking, but while it’s less volatile, in many ways, property is a far more challenging investment than shares.



The key to success in property is buying an asset to which you can add value – typically through renovation or rezoning. And to maximise returns, you need to secure it at a below-market price.



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