Stockmarket volatility and how to deal with it

Friday, 4 January 2019

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Investment strategy in volatile markets. Harris IFA, Boston Spa Yorkshire

Stockmarkets have been very volatile (and weak) recently, and there is a good chance that they will continue to be volatile for the foreseeable future thanks to Brexit, US interest rates, the whims of the Chinese economy and, no doubt, unforeseen events of various kinds. No-one can predict the short-term direction of markets – statistically speaking they are always pretty much as likely to rise as they are to fall. However, as long as your portfolio is well diversified, and suitable for your appetite for investment risk, then sticking with it is usually the best long-term strategy.

Any investment should be considered over a 5-10 year horizon at least. Attempting to "time the market", by taking money out and then putting it back in again, in volatile market conditions, isn't something we would recommend. One of the generally accepted golden rules of investing is to “get invested and stay invested”, and we would definitely support this sentiment.

However, if you do decide that your portfolio is riskier than you are comfortable with then a change is required. This should not be done as a short-term move – we would not recommend doing this with the idea of reinvesting the money later, as there is always a good chance that the market will rise in the meantime. However, if you do wish to permanently reduce the risk level of your investments then that is something you should get advice on sooner rather than later.

Get in touch if you would like more information.

Chartered Financial Planners. FCA Regulated (FCA no. 603653). Free initial assesment.