It’s understandable that seeing short-term fluctuations in your investment might feel concerning, but these fluctuations are a normal part of any investment journey, especially in Sharia-compliant funds. Islamic finance does not allow guaranteed fixed returns, as they would involve riba (interest), which is not permissible. This means that while there is a risk of short-term market movements, our investments are designed with the principles of risk-sharing and long-term wealth generation in mind.
For a more accurate evaluation of your investment’s performance, it's essential to consider a longer-term perspective. In general, we recommend assessing the performance of an investment over at least 12 months. However, in the case of superannuation, which is a long-term investment, it’s best to review the performance over a 3–5-year period. This approach aligns with the time frame over which the underlying investments are selected and expected to perform.
It’s important to remember that investment markets go through cycles of ups and downs. While short-term dips can happen, they also present opportunities to purchase undervalued assets, positioning the portfolio for future growth. By remaining invested over the long term, especially in your superannuation, you can smooth out these short-term fluctuations and take advantage of growth opportunities as they arise.
Below are some golden rules of the stock market and investments:
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Never get emotional
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Do not panic on short term falls
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Focus on future
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Do not sell prematurely and realize loses
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Do not place funds into cash during market volatility
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Hold your nerve