7 Steps To Navigate Turbulent Times (Singapore Edition)
These steps will help you stay focused and in control.
April 10, 2025
The recent market turbulence, largely influenced by new tariffs imposed by the U.S., has had a significant ripple effect on global markets, including Singapore. As a small, open economy heavily reliant on international trade, Singapore is particularly vulnerable to shifts in global trade policies. The new tariffs have created uncertainties that have impacted investor sentiment, leading to market fluctuations and heightened risk perceptions.
Given these challenging circumstances, it is crucial for investors in Singapore to stay calm and avoid making emotional decisions that could jeopardize their financial future. In times like these, a strategic approach is key to weathering the storm.
By following these simple yet effective steps, you can ensure that your investments remain steady, secure, and aligned with your long-term goals — even in the face of external disruptions such as the U.S. tariffs. Whether you’re concerned about market volatility or simply looking to optimize your portfolio during uncertain times, these steps will help you stay focused and in control.
Contents
Diversify Your Portfolio
Diversification is one of the most important principles of successful investing, especially in times of market uncertainty. By spreading your investments across different asset classes, you can reduce the overall risk of your portfolio and protect it from volatility in any one market.
Asset Class Diversification
A well-diversified portfolio typically includes a mix of stocks, bonds, Real Estate Investment Trusts (REITs), cash, and alternative investments. Each asset class has its own characteristics and tends to perform differently under various market conditions:
Stocks offer the potential for high returns but come with increased risk. Equities can provide growth over the long term, especially in bullish markets.
Bonds are generally lower-risk investments, providing steady income through interest payments. They can act as a stabilizing force during periods of stock market volatility.
REITs provide exposure to real estate, offering both income and capital appreciation potential. They are typically less correlated with traditional stocks and bonds, helping to further diversify your portfolio.
Cash provides liquidity and safety, ensuring you can access funds in case of emergencies or opportunities, though its return is typically low in comparison to other asset classes.
Alternative investments such as commodities, private equity, or hedge funds can offer unique opportunities and hedge against inflation, further diversifying your risk exposure.
By combining these different asset classes, you reduce the risk of a single investment type dragging down your overall portfolio.
Geographical Diversification
In addition to diversifying across asset classes, it’s also important to think about geographical diversification. Relying too heavily on any one country or region, such as the U.S. or China, can expose your portfolio to risks that affect those specific markets. For example, the recent tariffs imposed by the U.S. have caused ripple effects across Asia, and Singapore, being a trade-dependent economy, is particularly vulnerable to these external shocks.
To mitigate this risk, consider broadening your exposure to other regions. Emerging markets in Southeast Asia, Europe, and even within the Asia-Pacific region can offer growth opportunities and help balance your portfolio. By investing in different regions, you spread your risk and reduce the potential impact of localized economic downturns, trade disruptions, or geopolitical tensions.
In conclusion, both asset class diversification and geographical diversification are essential to building a robust portfolio that can withstand the unpredictability of turbulent markets and safeguard your long-term financial goals.
Avoid Emotional Decisions
Volatile markets can often trigger emotional reactions, and when emotions take the lead in investing, it can lead to costly mistakes. It’s natural to feel anxious or excited during market fluctuations, especially when there are external pressures like economic uncertainty or geopolitical tensions. However, acting on these emotions can cause you to deviate from your long-term financial plan and potentially derail your investment goals.
The Risks of Emotional Decision-Making
When markets dip, the fear of losing money can lead to panic selling, locking in losses that could have been recovered in the long run. Conversely, during periods of market growth, the excitement of potential profits can result in impulsive buying at inflated prices, increasing exposure to risk.
Emotional decision-making tends to undermine the core principles of investing, which are built around consistency and long-term growth. Investors often sell in a panic when markets decline and buy frantically when markets rise, resulting in buying high and selling low — the opposite of sound investment strategy.
"Time in the Market Beats Timing the Market"
A well-known saying in investing is: "Time in the market beats timing the market." What this means is that consistently staying invested in the market, regardless of short-term fluctuations, tends to yield better returns than trying to predict or time the market’s peaks and valleys.
Markets go through cycles, and short-term volatility is inevitable. However, history has shown that long-term investors who remain patient and stick to their strategies typically outperform those who try to time the market. Rather than reacting to short-term fluctuations, focus on the long-term growth potential of your investments.
Stick to Your Long-Term Strategy
The key to avoiding emotional decisions is sticking to a long-term strategy. When you’ve set clear financial goals and a well-diversified portfolio, trust the process and remember that volatility is a normal part of investing. Stick to your investment plan, rebalance when necessary, and avoid chasing short-term gains.
It’s also helpful to establish a mindset of resilience — knowing that short-term market downturns are usually temporary and that your investment horizon is designed to ride out these ups and downs. By staying calm and patient, you’ll be better positioned to take advantage of opportunities during downturns without being driven by fear or greed.
In conclusion, the most successful investors understand that emotional decisions based on market movements rarely lead to long-term success. Stick to your strategy, stay focused on your goals, and remember that consistent, long-term investing is often the most reliable path to wealth creation.
Rebalance Regularly
One of the most critical practices for maintaining a well-managed investment portfolio is rebalancing. Over time, the value of your investments can shift, causing your portfolio to drift away from its original allocation. This is especially true during periods of market volatility, where some asset classes may outperform while others lag behind. Regularly reviewing and adjusting your portfolio ensures that it remains aligned with your risk tolerance and long-term financial goals.
Importance of Reviewing and Adjusting Your Portfolio
A well-diversified portfolio is designed with a mix of asset classes (stocks, bonds, REITs, cash, etc.) to balance risk and reward. However, market fluctuations can alter the weight of each asset in your portfolio. For example, if stocks perform well, they may make up a larger portion of your portfolio than originally intended, potentially increasing your exposure to market risk.
Rebalancing helps you manage this drift by adjusting your portfolio back to its target allocations. This ensures that your portfolio stays in line with your financial objectives, such as the amount of risk you’re willing to take and the returns you’re aiming for.
Aligning Portfolio Allocations with Risk Tolerance and Goals
As markets change, so might your personal situation. Perhaps your risk tolerance has changed, or you are approaching a financial milestone such as retirement, which requires a more conservative approach. Rebalancing allows you to reflect these changes in your portfolio.
For instance, if you’re nearing retirement, you might want to reduce your exposure to high-risk assets like stocks and increase your allocation to more stable investments such as bonds or cash equivalents. Conversely, if you're in your prime earning years and can tolerate more risk, you might want to shift your portfolio to include more equities for higher potential returns.
Rebalancing helps you maintain the right balance between growth and risk based on your current circumstances and goals. It also provides the opportunity to take advantage of market conditions — for example, if certain assets are undervalued during a market downturn, rebalancing could allow you to buy them at a discount.
How Often Should You Rebalance?
There’s no one-size-fits-all answer to how often you should rebalance, but it’s generally recommended to review your portfolio at least once a year or after any major life events (e.g., retirement, a significant change in income, or a change in risk appetite). Some investors choose to rebalance on a quarterly or semi-annual basis, depending on their preferences and market conditions.
Additionally, it’s important to monitor your portfolio regularly to ensure it remains aligned with your overall investment strategy. This is particularly relevant during volatile times when the market is moving rapidly, and your portfolio’s allocation may have shifted more than anticipated.
Maintain Emergency Savings
In times of market volatility or economic uncertainty, having a solid emergency savings fund is more important than ever. While investing for the future is essential, it’s equally crucial to ensure you have enough financial security to navigate unexpected disruptions without derailing your long-term financial goals.
Recommended Amount for Emergency Savings
Financial experts generally recommend setting aside 6 to 12 months' worth of living expenses in an easily accessible form. This cushion helps protect you from sudden income disruptions — whether due to job loss, medical emergencies, or unforeseen economic conditions like market downturns. Having this safety net allows you to cover your essential expenses, such as housing, utilities, food, and healthcare, without the need to sell investments at a loss during tough times.
The amount you need may vary depending on your personal situation. For instance, if you’re a freelancer or in a job with an irregular income, a larger cushion of 12 months might provide you with more security. On the other hand, if you have a stable, salaried position with other sources of financial backup, 6 months might be sufficient.
Importance of Having Liquid Cash or SSBs
One of the key principles of an emergency savings fund is liquidity. It’s essential to have your savings in an account or investment that can be easily accessed in case of an emergency. This means cash, savings accounts, or Singapore Savings Bonds (SSBs), which offer guaranteed returns and are backed by the Singapore government. These are perfect vehicles for your emergency savings because they provide a balance of safety and liquidity.
Unlike stocks or real estate, which can fluctuate in value and may require time to sell, liquid assets like cash or SSBs ensure that you can access the funds quickly when needed. This reduces the likelihood that you’ll need to dip into your investment portfolio or take on debt to cover unexpected expenses during a market downturn.
Moreover, having cash or low-risk investments in your emergency savings allows you to remain financially secure during periods of uncertainty. If markets are down, for example, you won’t be forced to sell stocks or other assets at a loss. Instead, you can rely on your emergency fund to weather any short-term disruptions and allow your investments to recover in time.
Benefits of an Emergency Savings Fund
Peace of Mind: Knowing that you have a financial cushion reduces stress during uncertain times.
Protection for Investments: It ensures you don’t have to liquidate investments prematurely, which could potentially harm your long-term returns.
Flexibility: An emergency fund gives you the flexibility to deal with unexpected life events, without the need for high-interest loans or credit card debt.
Maintaining an emergency savings fund is an essential step in safeguarding your financial health. By setting aside 6 to 12 months' worth of expenses in liquid, easily accessible forms like cash or SSBs, you can ensure you’re financially prepared for disruptions without sacrificing your long-term investment goals.
Focus on Resilient Sectors
During times of market volatility, focusing on resilient sectors can help protect your portfolio from significant downturns while still offering growth potential. Some industries are more insulated from economic fluctuations, making them more stable investments during turbulent times. By strategically allocating your portfolio to these sectors, you can help safeguard your investments against external shocks like global trade disruptions, economic slowdowns, or geopolitical tensions.
Key Defensive Sectors
Healthcare: The healthcare sector is considered one of the most defensive industries because demand for healthcare services and products remains relatively stable, regardless of economic conditions. People still need medical treatment, prescriptions, and healthcare services, which makes the sector less vulnerable to market downturns. Companies in pharmaceuticals, medical devices, and healthcare providers tend to perform steadily even in times of economic stress.
Utilities: Essential services such as water, electricity, and gas are always in demand, no matter the economic climate. As a result, the utilities sector is often regarded as a safe haven for investors. These companies typically offer reliable dividends and stable earnings because people need to use these services every day, regardless of market conditions.
Consumer Staples: The consumer staples sector consists of businesses that produce essential goods, such as food, beverages, household products, and personal care items. These are products that people continue to purchase, even in times of economic uncertainty. Companies like those in the food, beverage, and hygiene industries are considered recession-proof, as consumers prioritize these necessities over discretionary spending.
Local Services: Local services, such as retail, transportation, and education, tend to be more resilient, particularly if they cater to everyday needs and serve a stable customer base. In Singapore, sectors like public transport, telecommunications, and local retail chains are more insulated from global volatility compared to export-reliant industries. These services are typically seen as essential and continue to perform even in times of economic slowdowns.
Reducing Exposure to Export-Reliant Sectors
While resilient sectors offer stability, it’s also important to consider reducing exposure to export-reliant sectors during times of market uncertainty. Industries that rely heavily on international trade — such as manufacturing, shipping, and export-based commodities — can be more vulnerable to global disruptions, like the U.S. tariffs or trade tensions between major economies.
In Singapore, for example, sectors such as electronics manufacturing or oil and gas are sensitive to fluctuations in global demand and pricing. When trade policies change or global economic conditions sour, these sectors can experience sharp declines in earnings, affecting stock prices and performance.
By adjusting your portfolio to reduce exposure to export-reliant sectors, you can minimize the impact of global disruptions on your investments. Instead, consider reallocating some of your assets to more resilient sectors, where demand is more consistent and less influenced by international trade tensions or economic slowdowns.
Look for Undervalued Gems
Market volatility often creates opportunities for savvy investors to discover undervalued stocks. During market dips, high-quality companies may temporarily drop in price, presenting a unique chance to purchase them at a discount. These opportunities are often overlooked by investors who are solely focused on short-term market movements. However, by identifying these undervalued gems, you can position your portfolio for growth once the market stabilizes.
Opportunity in Market Dips
Market downturns can be unsettling, but they also offer the chance to buy stocks at prices lower than their intrinsic value. When market sentiment is negative, stock prices can become oversold, even for fundamentally strong companies. This creates a window for investors to buy solid companies at a fraction of their true worth.
It's important to differentiate between companies temporarily underperforming due to external market factors and those facing structural issues. The goal is to spot quality companies that have strong fundamentals but are trading below their potential because of broader market fears or temporary issues.
Focus on Companies with Strong Cash Flow, Low Debt, and Pricing Power
When searching for undervalued gems, it’s crucial to focus on companies with strong financial health. Here are three key characteristics to look for:
Strong Cash Flow: Companies with consistent and robust cash flow are more likely to weather financial downturns. Cash flow is the lifeblood of any business, allowing it to reinvest in growth, pay dividends, and weather periods of economic uncertainty. Companies with strong cash flow are typically able to maintain operations, even when their stock prices dip, making them attractive investments during market volatility.
Low Debt: Companies with minimal debt are generally in a stronger position to handle economic challenges, especially when interest rates rise or market conditions tighten. A low debt-to-equity ratio indicates that the company is not overly reliant on borrowing to fund its operations, which can reduce the risk of financial distress during tough times. Investing in low-debt companies ensures that your portfolio is better protected from financial instability.
Pricing Power: A company with pricing power has the ability to raise prices for its goods or services without significantly affecting demand. This is often seen in industries with strong brand loyalty, essential products, or limited competition. Companies with pricing power can maintain profitability even when inflation or costs increase, making them more resilient during periods of economic uncertainty.
How to Spot Undervalued Gems
When evaluating stocks, look for companies that are currently undervalued by market sentiment but still exhibit strong fundamentals. Tools such as price-to-earnings (P/E) ratios, price-to-book (P/B) ratios, and dividend yields can help identify undervalued stocks. Additionally, consider the long-term outlook for the company’s industry and market position, as well as its ability to adapt to changing economic conditions.
Stay Informed, Not Overwhelmed
In today’s fast-paced world, it’s easy to get inundated with a constant stream of news, especially when markets are volatile. While staying informed is crucial to making sound investment decisions, overloading yourself with information can lead to confusion, anxiety, and poor decision-making. It’s important to strike a balance — staying informed, but not overwhelmed.
Advice on Staying Informed Without Getting Overwhelmed
Investing requires a clear focus, and constant exposure to news can lead to emotional reactions or a tendency to chase short-term trends. Instead of reacting impulsively to every piece of news or market movement, it’s essential to cultivate a disciplined approach to information.
Consider setting aside specific times each day or week to review financial news. This can help you filter out the noise and focus on key developments that actually impact your investment strategy. This focused approach allows you to make more informed decisions without getting caught up in the daily ups and downs of the market.
Additionally, avoid sources that promote sensationalism or panic-driven headlines. While it’s important to be aware of global events, remember that not every headline will affect your portfolio directly. You don’t need to react to every bit of news; instead, look for long-term trends that align with your strategy.
Focus on Reliable Sources and Key Factors Influencing Investments
To stay informed without feeling overwhelmed, it’s critical to rely on trusted and reliable sources. Focus on information from financial analysts, reputable publications, and official sources that provide well-researched insights. Look for data that helps you understand the bigger picture, rather than minute-by-minute market fluctuations.
While staying up to date on news and market trends is important, it’s also crucial to focus on the factors that directly influence your investments, such as:
These are the key factors that can drive longer-term market movements and impact your portfolio. Staying focused on these elements allows you to make informed decisions without getting distracted by less relevant, short-term news.
Avoid Information Overload
One common pitfall for investors is getting caught in the trap of information overload. With social media, 24-hour news cycles, and countless market analysts providing differing opinions, it can be easy to become overwhelmed. The key is to filter out noise and focus on what truly matters for your long-term investment strategy.
Take breaks from news when necessary, and remember that staying calm and strategic is more important than being constantly connected to the latest headlines. Trust your strategy, stick to your plan, and avoid making decisions based solely on the latest market chatter.
Navigating through volatile markets can be challenging, but by following a disciplined and strategic approach, you can protect and grow your investments even in turbulent times.
In times of uncertainty, it’s crucial to remain calm, stay informed, and stay focused on the long-term. Remember, time in the market beats timing the market. By maintaining a disciplined approach, you can not only weather the storm but also seize opportunities for growth as markets stabilize.
Stay steady, secure, and smart, and trust that your strategic planning will help guide you through these challenging times and toward financial success.
