The news is constantly showing us that the worlds economies are going through a period of uncertainty. It is natural to feel nervous about pension and investment funds at the moment. Most funds and portfolios have been on a rollercoaster ride over the last 12 months, however 5 year figures are still very positive.
Markets will rise and fall, but for the long-term investor this shouldn’t be the primary concern. There are even good reasons to see opportunity, especially for those that can afford to invest regularly.
Below are some guidelines to investing to follow; especially in turbulent times:
1 Get Independent Advice
An Independent Financial Adviser will get to know you, your goals and your tolerance to risk. They will create a plan that is tailored to you, recommend a suitable investment strategy and will keep you on track at regular reviews. What’s more, in turbulent times advice helps you to make the right decisions and takes the emotion out of investing, providing an objective expert view. Paying for ongoing advice may be the best investment you ever make.
2 Make an Investment Plan and Stick to it
A robust financial plan can mean the difference between hoping for the best and achieving your goals. You can be focused on your long-term goals without being concerned about short term market changes. Cash flow planning software used by advisers can often simulate a normal market with both ups and downs to see how this impacts your plan.
3 Time in the market rather than trying to ‘time’ the market
People often mistake buying and selling at the right time to be the key to investment success. The truth is that no one knows when the markets are at their highest and lowest. Trying to time the market is seldom successful. It is far more important to have time in the market. The longer you can invest for, the more likely you are to have the potential for healthy returns, and the more likely you are to achieve your long term goals, regardless of short term blips.
4 Cash isn’t always king
When markets are volatile it is tempting to put all of your money into cash. However, if your long term goals are growth this might not be your best option, especially in a low interest rate environment. Every investor needs an emergency fund in cash, but for any money that is for long term needs, it is wise to consider investing in other asset classes too, these can offer the potential for better capital growth and can beat the perils of inflation.
When one asset class isn’t performing, there is often a different asset class that is doing well. It is the same for investment managers and corporate sectors. It is very important to diversify across asset classes, investment managers and corporate sectors as well as geographies. This is one reason we often recommend portfolios that ensure diversity along with expertise from several different investment managers.
6 Stay Invested
When markets are volatile it is tempting to switch to cash, move to a lower risk fund or encash altogether, all in an attempt to reduce further losses. In actual fact by doing this you would be guaranteeing losses, with no way of recouping any gains lost. Being out of the markets for just a few days can have a devastating effect on returns. Don’t try to time the market. Stay invested.
If you are looking to get some advice on Investing , then please call Northfield Wealth on (01455)886328 or send us an enquiry.