We’ve all heard and seen the headlines. Stock markets are going through an intense period of volatility. When markets get rocky like this, it can be tempting to take action. Discipline is key. It can be hard to go against your instinct and emotion to react to these conditions. But it’s important to remember your goals and allow the markets to readjust. Here are a few key things to remember to help you weather stockmarket uncertainty. And if you’re concerned about your investment during the current period of market volatility, don’t hesitate to get in touch with us
Diversification is key
A well-balanced portfolio will help smooth returns over time. Not all asset classes will be increasing or decreasing in value at the same time. It just makes good sense to ensure you are invested across a wide variety of assets. In addition, your financial advisor will have assessed your risk tolerance and attitude. Your investment should reflect this. Diversification matters as it is a key way to balance risk and reward in your investment portfolio. By spreading your investments around your exposure to any one type of asset is limited.
Trust insight not instinct
Witnessing your investment drop in value can be emotional. Human instinct is to react by getting out of the market. But remember markets themselves do not necessarily react in a rational manner. Boom and bust cycles have been a feature of investing as long as markets have existed. This is why for once don’t trust your instinct. Trust historical market insights. History shows that stock markets are cyclical. There are patterns of ups and downs over long periods of time. Each downturn differs in it’s depth and duration but each has been shown to be followed by a corresponding upturn.
Time not timing
Market timing is an investing strategy in which the investor tries to identify the best times to be in the market and when to get out. It can be a risky strategy as markets change rapidly. The opposite of market timing is buying and holding as the market goes through its cycles. Your investment has been placed in a fund that has been designed to take into account the cyclical nature of the markets. It is a far better strategy not to make a snap judgement or rush to buy or sell investments without very good reasons.
This is an unprecedented time, with a variety of factors converging to prompt the volatility that the markets are currently feeling. But we’ve been in unprecedented times before. Through wars, global health crises and recessions, history has repeated itself and the markets and economies have bounced back. There’s no reason to think that today’s stockmarket uncertainty will be any different.
At Premier Insurances, we are always here to answer your questions and help you make the right decisions in relation to your investments. Just get in touch if you have any concerns you wish to discuss.