Dear clients,

Wishing you a Happy New Year and to start off the year I wanted to share some thoughts from recent plans and advice I have been working on.

We totally understand that it is a disappointing time for many as they watch their asset values decline and their cost of living rise, but whilst this is part of the investment cycle like every period of adversity you face it pays to look for the opportunity to take make the most of this.

We have many clients with a large holding in a single asset, many are new investors by virtue of being employees of a tech company, this dramatic fall in tech stocks has a number of these investors/clients wondering if having all your eggs in one basket is wise given the massive effect this fall has had on their wealth plans.

Now more often than not holding an asset and waiting for the asset price to recover is the best and most logical option. But for some they may consider the following potential options:

  1. Falling markets are an investment opportunity for those with the access to capital and the risk appetite to invest for the longer term i.e. cheaper share prices are a buying opportunity that will be profitable if/when the asset you purchase rises. History has shown that markets rebound after every previous crash and that they continue to grow over the long term.
  2. If your shares have fallen in value this may be a good time to consider;
    • Diversifying your investments, a lot of our clients have employer shares in a single company, their plan is to diversify to broaden their asset holding so they can reduce their long term risk, selling and re-investing in the same market may be an option.
    • Restructuring assets, some clients are waiting to move their assets to a more tax efficient and protected place, just to illustrate this point they could even purchase the same investments again.

Both 2a. and 2b. above are possible ways to take advantage of lower share prices, a lower share price means lower capital gains tax (CGT) to pay on the sale or transfer of shares.

It may be an opportunistic time to consider such actions.

 DO NOT ACT until you have considered:

  • The growth prospects of the new investment compared to the old, you need to think about your goals and objectives and your longer term plan.
  • You must consider the transaction costs including the CGT payable.
  • Without a discussion about the appropriateness of any changes with your wealth adviser, you must determine whether an action like this makes sense for your specific situation (see the mandatory general advice warning below).


Interestingly the point of maximum financial opportunity is at the bottom of the market in this illustration

Interestingly the point of maximum financial opportunity is at the bottom of the market in this illustration

If this interests you and you would like to discuss further please call us on PH: (02) 9816 3444

Adrian and the VJC Wealth team