Keeping a calm head during periods of market volatility

Posted on August 24, 2022

It can be very unnerving for investors to see a significant fall in the value of their pension or investments over a short period of time. The key thing to remember however is that this is entirely normal. Investment markets can be very sensitive to negative news such as sharply rising inflation levels and this can impact equity and bond values. The opposite is true when there is positive news.

So what should clients do during periods of stress in markets? Here are a few tips:

  • Remain calm, disciplined and focused on your ultimate goals over the medium to long-term rather than getting too distracted by short-term volatility. A loss is only crystalised if you sell.
  • History shows that, no matter what challenges the global economy has faced, markets have ultimately recovered from downturns and have gone on to deliver impressive returns over the longer term.
  • Cash savings are important to provide a buffer to cover unforeseen events although investing only in a bank account will likely result in you losing value in real terms as savings account returns rarely keep pace with inflation
  • Avoid concentration risk. Depending on your risk tolerance, ensure that your investments are diversified across asset classes and markets as far as possible
  • A regular review of your investments is highly recommended although try not to check their value too often as this may cause unnecessary stress. It is time in the market that counts rather than trying to time the market that is key. Focus on the longer-term and meet with your adviser regularly for a periodic review

Call us today on 754449 for a free consultation to discuss how we can assist with making your money start working for you.

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