Investor Tips For Unsettling Times
Investor tips for unsettling times
Here at Broadway Financial Planning, we work closely with an investment strategic analyst in order to provide our clients with what we feel is the best possible investment solution. Their wealth of knowledge and expertise provides us with great reassurance, especially in uncertain times like these, and so we thought this was a good opportunity to share their tips for investors who may be concerned by current affairs:
“The news today can feel a little bit unsettling. There is no doubt that these are tough emotional times for investors. Russia’s invasion and brutal war in Ukraine is unsettling on both a human and an economic level. The plight of the people of Ukraine and the broader pitting of Western values against totalitarian oppression weigh heavily. The impact of the war on energy, fertilizer, commodity and food prices, combined with global supply bottle necks and continuing Covid lockdowns in China are exacerbated by the growth in money supply from quantitative easing and financial support measures taken during the pandemic. This has led to a rapid rise in inflation globally to levels not seen for several decades. That can feel uncomfortable.
Here are some tips to help keep things in perspective at this challenging emotional time:
1. Accept the uncertainty of markets – a well-diversified portfolio protects you from any one area of the markets suffering particular pressures. Your portfolio will probably be performing better than the headlines suggest.
2. Don’t measure your portfolio’s performance from the previous top of the market, but over a longer and more sensible timeframe, and from where you started. The last few years have been really good to investors. Giving a little back is part of any investing journey.
3. Try not to look at your portfolio too often. Get on with more important things in your life. Once a year is more than enough, but that takes some will power!
4. Accept that you cannot time when to be in and out of markets – it is simply not possible. If you resign yourself to this fact, investing feels much less stressful.
5. If markets have fallen, remember that you still own everything you did before i.e. the same number of shares in the same companies, and the same bonds holdings.
6. Most crucially, a fall does not turn into a loss unless you sell your investments at the wrong time. If you don’t need the money, why would you sell?
7. The balance between your growth (equity) assets and defensive (high quality bond) assets was established by your adviser to make sure that you can withstand temporary falls in the value of your portfolio, both emotionally and financially. A recent fall in the markets does not change this.
8. Be confident that your (boring) defensive assets will come into their own, protecting your portfolio from some of the pain of material equity market falls, if they occur.
9. If you are taking an income from your portfolio, remember that if equities have fallen in value, you will be normally taking your income from your bonds, not selling equities when they are down.
10. Your adviser is there – at any time – to support you. They are a source of fortitude, patience, and discipline on which you can draw.
These are unsettling times, but your best defence is generally to keep to your plan, remaining invested in a well-diversified, robust portfolio and leaning on your adviser if necessary”
Risk warnings
This article is distributed for educational purposes and should not be considered investment advice or an offer of any security for sale. This article contains the opinions of the author but not necessarily the Firm and does not represent a recommendation of any particular security, strategy, or investment product.