Financial Tips

Five Tips for Staying Sane When Markets go Mad

 

1. If you have followed a financial plan, then sufficient levels of cash should already be held in reserve for shorter term requirements. If this is the case, then you should not be dependent on access to your investment portfolio right now.

2. If you still maintain an investment horizon over a number of years from today, it is important to remember that it is the value of your investment in the future that is key and not the value today.

3. Making the assumption that your portfolio is falling at the same rate as the various global stock markets reported in the media also assumes that you are invested 100% in those markets. In reality most investors following an asset allocation plan will have capped exposure to the stock market, therefore if your portfolio is allocated 50% stocks and 50% bonds then you will have approximately half the exposure to any stock market volatility.

4. Selling now would trigger an actual loss rather than what is currently a paper loss and if you sold now where would you put the receipts to enable you to recoup any losses?

5. Markets move quickly as we have seen in the last two weeks or so. If and when a recovery comes it is also likely to be swift so market timing, trading in and out, could leave you even worse off if you get it wrong.

 

It is perfectly natural and understandable to take fright from the current volatility however the key to traversing the current problems is to not panic, take a step back to calm your thoughts, remember your original reasons for investing and only take action if is absolutely necessary for you to do so. Sometimes it might even be worth turning the television off if it spares you from taking the wrong action.

 

To read further visit;
http://www.morningstar.co.uk/uk/690/articles/100365/Five-Tips-for-Staying-Sane-When-Markets-Go-Mad.aspx

 

If you have any concerns or queries please feel free to call me on 01652 680859.