Sound financial advice for those investors worried about market volatility.

Listen to this article 4 min Listen to this article 4 min Question: I have seen several stories in social media about the imminent collapse of the US economy. We recently had a major collapse in the Japanese market and the local stock market also fell. Should we take our money out of the markets and invest in gold coins?

Answer: I cannot give you specific advice, but I can point you to three principles that may help you to make a better decision.

1. Have an investment plan

An investment plan does not consist of putting money into one asset class in the hope that this asset will do better than everything else. That is speculating. What I'm talking about is a well-considered investment plan that can do the following:

It can cope with most eventualities in your and your children's lifetimes. Over this period, you will have markets falling and rising, inflation and recession, as well as political uncertainty. Your portfolio needs to be able to cope with these events.

It must consider the long, medium and short terms. You can expect volatility over the short term, but should be able to live with it if you understand...