The last year or so has been challenging for investors. Record levels of inflation and wide fluctuations in the stock markets mean many investors have seen a significant reduction in the value of their investments, whether it is an ISA or trust.
We know it is hard to keep a cool head when you see your investments go down in value, but pension investors must remember that you are investing for the long term and it is important to restrain from reacting to short term volatility.
Go deeper with GlobalData
‘Don’t panic. Sit on your hands’
We understand that investors, worried about further losses, are tempted to just take the money out. However, doing so will guarantee that any recent losses in the value of your investments will become permanent. As a result, we ask our clients to take the time to consider this as an option – ‘Don’t panic. Sit on your hands.’ This way, investors can allow time for investments to potentially regain any ground they have lost. Although things may feel tough at the moment, and it may feel like they have been for a while, these are part of a market cycle that will pass.
Only take out the cash you absolutely need
As advisers, it is common for us to use forecast software to project to the age of 100, to give reassurance to our clients that their portfolio will sustain them, despite market fluctuations such as those we are experiencing.
For those that depend on short-term income however, the best-case scenario would be to secure another source, such as cash savings that you can access. And for those who do need to take out cash from their investments, consider only taking out what you absolutely need to get by.
As a general consideration for long term investors, you should always ensure that you have a financial buffer to keep yourselves and your families protected, and to cover fixed expenses such as utilities and mortgages. It is also very important to have a financial manager who can help you consider the best decisions for you and your portfolio, taking into considerations your life stage, aspirations, and financial responsibilities.
How well do you really know your competitors?
Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.
Thank you!
Your download email will arrive shortly
Not ready to buy yet? Download a free sample
We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form
By GlobalDataAn opportunity to buy?
For clients brave enough to dip their toe in the water right now, the current state of the market and the low price of shares can be an opportunity to buy. However, they should be wary to not put all their eggs in one basket, as we are still in this inflation cycle and do not know for certain when interest rates will stabilise. Having a diversified portfolio will empower clients to weather the storm.
Richard Basford is a Wealth Management Director at NFP
