Investing Through the Current Crisis and Beyond

Financial markets have seen increased volatility since the outset of the Covid-19 pandemic, and with a continual flow of new information there is no clear indication as to whether markets are priced too high or too low.

With this in mind, we would like to share seven principles that we believe give a concise strategic framework for investing money in the current climate and beyond.

Get advice

When markets are moving up, worries of investors tend to be low as they are comforted by the increase in value of their wealth. However, investor behaviour can change as markets fall. The primary offender in this regard is loss aversion which often leads to bad decision making. Taking, and continuing to take, financial advice will help you understand the current investment landscape and prevent decisions that could adversely affect your ability to build wealth over the longer term.

Make an investment plan and stick to it

Whether you are saving for retirement, funding your retirement via income withdrawals, saving for a special event, utilising various tax efficient investment vehicles, investing for income or growth, or investing in your capacity as a Trustee, Attorney or Deputy, never lose sight of why you have invested in the first place; to achieve long term returns in excess of cash plus inflation.

Invest as soon as possible

Timing the market is a notoriously difficult skill to master and one that is fraught with risk. By investing at the earliest possible opportunity, you will allow your investment sufficient time to ride out the peaks and troughs of the market.

Don’t just invest in cash

With interest rates currently at all-time lows and the consensus seeming to provide little prospect for increases over the short term, cash is certainly not king. Therefore, it is imperative that investors look to use other asset classes that can provide the potential for greater long term gains and ultimately protect the value of their wealth after inflation.

Diversify your investments

Or quite simply, do not have all your eggs in one basket. Diversifying across different asset classes and geographic regions will not only help to mitigate risk but will assist in generating positive, long term returns.

Invest for the long term

This, we believe, is the key to successful investing. Not only does it give you time to ride out the peaks and troughs of market movements but it also gives you the opportunity to invest in assets that have the potential for significant long term growth. Short term investing is more akin to speculation, leaving a greater exposure to the vagaries of the market.

Stay invested

History has shown that markets go up and down, and when they fall, they recover. Staying invested will ensure you capture the long term upside of stock markets.

To highlight this, Schroders looked at the performance of the FTSE 250 Index over the last 30 years. It confirmed that remaining in the market rather than trying to time the market produced the best results.

Period invested Annualised Return
Whole 30 years 11.60%
Best 10 days missed 9.60%
Best 20 days missed 8.20%
Best 30 days missed 7.00%

 

Conclusion

When investing, it is imperative that these principles are upheld at all times. We ensure that the financial position of all our clients is sufficiently strong to withstand periods of market stress. Ultimately, the best strategy is to invest as soon as possible, and stay invested for the longest possible period of time; and these are our overarching principles when it comes to managing the investment of your money.

 

NB. The value of investments can fall as well as rise. You might not get back what you invest.

This entry was posted in Financial Planning, Investments. Bookmark the permalink. Both comments and trackbacks are currently closed.
  • Twitter

  • Testimonials

    On behalf of Walk & Talk Group, I would like to thank you for the most informative, enjoyable and appropriate presentation you gave. Members found the session of great value and very useful.
    I knew I had to start the ball rolling with getting our finances sorted but it was a hard thing for me to do as it cements the fact that our lives have changed forever. You made the whole process so much easier.
    Just a big thank you for all you have done for our family. We do appreciate it.
    I’m really impressed by how responsive you have all been to get this through against such a tight timescale.
    Thanks again for your advice, you have given me the kick I needed to take control and I’m very grateful for that.
    A very personalised service… All advice is tailored to my needs with great consideration to issues I may not have thought of myself. I feel confident about my future finances.
    We feel we can phone at any time during office hours if we need anything clarifying. Our financial adviser knows our personal circumstances and is in tune with our goals and lifestyle. His advice has been and continues to be excellent.
    I just want to thank you and your team so very much for all you do for me throughout the year. It is a real comfort to know that my investments are in such capable hands. I literally couldn’t do it on my own.
    With great thanks for all your reassuring attention over the last year. It means more to me than I can express in a few words.
    Thank you so much again for your time and brilliant advice.
Main Menu