As investors navigate increased market volatility in 2025, uncertainty seems to be the only certainty. From an upcoming Australian election to Donald Trump’s ever-changing tariffs and policies, which are shaking markets and escalating geopolitical tensions, investors are nervous.

The All Ordinaries Index dropped around 4.3 per cent in the calendar year 2025 to March 11, contributing to investors’ sense of insecurity. In the US, equity markets have also dropped, led by technology shares.

Investors need to remember that it is share market volatility that creates opportunities for capital growth.

Heightened concerns about US trade tariffs and the threat of a global trade war have pushed some investors to start selling out of equities, or to pile into gold and government bonds, on concerns about weaker economic growth and potential stagflation.

All of this leads to uncertainty, and investors don’t like uncertainty.

However, amid this heightened market volatility, there is opportunity. Share prices are now a lot cheaper, which is a good basis for building long-term wealth. In addition, interest rates are beginning to fall and the trimmed inflation figure is dropping back to within the Reserve Bank of Australia’s target band of 2 to 3 per cent.

This will help take some sting out of mortgage repayments and leave more cash for other things such as investing or buying goods.

It is important for investors to remember that it is share market volatility that creates opportunities for capital growth. It is always a good idea to reflect on investment goals and preferences to make sure you are comfortable with the approach you are taking.

Remember that it is time in the market, not market timing, that drives wealth gains.

Select the appropriate asset sectors and allocate broadly. This could involve diversifying across Australian shares, international equities, property, infrastructure, high-yield debt, or fixed-interest investments. Each asset class carries its own risk and return profile, and the ideal mix will depend on individual circumstances, risk tolerance, and investment timeframe.

Diversification is a cornerstone of sound investment strategy. Diversifying across different asset classes helps to mitigate risk and improve the overall stability of a portfolio.

Question the temptation of alternative investment opportunities. They may lack the transparency of exchange-traded funds, traditional managed funds and fixed-interest instruments such as publicly traded bonds. Before investing in alternative asset classes, check you have a clear understanding of what is being invested in before committing capital.

Liquidity is another critical factor that is often overlooked until it is needed. Nobody anticipates redemption problems until they find their investments locked. Therefore, exercise caution when allocating funds to illiquid investments such as residential property, which is one of the most illiquid of investments, yet still very popular among Australians, accounting for close to 70 per cent of household wealth.

Accessibility to assets is another vital consideration. While contributing to superannuation can be tax-effective, it may not be the most suitable option for everyone, such as a 40-year-old where the prospect of locking away funds for another 25 years may not align with their financial goals or needs.

While tax should not dictate investment decisions, it is essential to be aware of the tax implications of investments. Be prepared to pay tax on profits, but also take steps to structure wealth in a way that minimises the tax burden.

For business owners, it is particularly important to avoid tying all their wealth to the fortunes of the business. Aim to build wealth independently outside of the business through superannuation, for example.

Be careful about debt as well. As interest rates decline, borrowing to invest may become more appealing. However, remember that while leveraging can magnify potential gains, it can also amplify losses. A significant share market downturn can devastate a leveraged share portfolio, potentially leading to margin calls.

As an investor, plan ahead and have cash on hand to take advantage of the opportunities that are emerging as share prices fall, understanding that there will be fluctuations along the way. Investing for longer periods provides the flexibility to ride out market downturns and benefit from long-term growth. Building wealth requires consistently setting aside funds for investment and allocating those funds to prudent investment vehicles.

So, while share market uncertainty may be unsettling, it also presents opportunities for long-term wealth creation. By focusing on the fundamentals of diversified asset allocation, liquidity, tax efficiency, diversification and taking a long-term perspective, investors can navigate these uncertain times.

It is almost impossible to time the market over either the short term or over the long term, so investors are usually best off buying and holding their position over the long term and building a well-diversified portfolio.

If you have any further queries regarding the article, please feel free to book an appointment with your Financial Advisor who would be more than happy to discus any questions you may have. Either email us at clientservices@vostroprivate.com.au or 03 9867 4345.