Moneytree Wealth Management

Tips for investing in a volatile market

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Tips for investing in a volatile market

If you’re starting to feel twitchy about your investments and are wondering what the best thing to do with them is, you’re not alone. It’s only natural to be unsure when the situation is so unpredictable. To help you make sense of it all, we’ve put together some tips to help you invest in a volatile market.

Make a plan (and stick to it)

Just as in less taxing times, coming up with a financial plan to help you achieve your goals is really important. Think about your long-term and your short-term goals, what you want to do to look after your family, and your attitude to risk.

Once you’ve made your financial plan, make sure you stick to it, especially through short term fluctuations in markets. Keep focused on the bigger picture, where you started and where you are trying to get to.

Plans should be regularly reviewed (milestone checked) and adjusted for changes in personal circumstances and changes in longer term objectives but if these things remain constant, and you remain on course to achieve your long term goal(s) then follow your plan.

Invest as soon as you can

The quicker you invest the better, so don’t put things off and wait to see what happens. Delaying might mean you’ll miss out on compound growth / interest (where percentage growth or interest is earned on top of previous growth / interest), which could add up to a significant sum, even when interest rates are so low and the stock market is so unpredictable.

Cash isn’t always king

Although it’s considered safe, just investing in cash won’t always give you the biggest return. Because of inflation, cash loses value over time, so spreading your investments over lots of types of assets, as well as cash, will usually give you the best results, especially over the long term. Diversifying your portfolio also helps balance out bumps along the way when certain assets might not be doing so well.

Think about the long game

We’ve mentioned investing over the long term a few times already, and we make no apology for doing so again. Stock markets have always been volatile as they mirror the events of the outside world, but they always stabilise, and investments tend to go up over the long term.

Stay invested in your investments

There’s always a temptation to switch to something more secure, like cash or a lower risk fund at times like these. However, you should stick to your guns and ride things out if you can. You could miss out on compounded interest (like investing as soon as you can above) or a period of growth you didn’t see coming. With something like equities for example, you could potentially earn three times as much as much as someone who missed the best 25 days over 25 years just by leaving your investment where it is.

Always talk to an adviser

This is the golden rule whenever you’re thinking about investing, and not just when the market’s so up and down. As well as getting the benefit of their expertise, talking to an adviser helps take the emotion out of financial decisions and gives you an objective view. Not taking financial advice could cost you a few quid too - £31,000 of pension wealth and over £16,000 extra in non-pension financial wealth over 10 years in fact.

The value of investments and the income they produce can fall as well as rise. You may get back less than you invested.

Tom Lenton

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