Why now could be a good time to invest

By Chartered Financial Planner, Louis Maddison

Imagine having the ability to predict market movements so you could buy low and sell high? But the markets are unpredictable — prices of stocks and shares change every second. Throughout history, certain funds have done astonishingly well, and others have gone off the boil.

It may not seem like it at first, but whilst markets are in turmoil, it has historically been a good opportunity to invest. We always tell our clients that it’s time in, not timing.

Diversification

That brings us to diversification. Diversification is having investments that react differently to the same events. Let’s say that you have investments in an ice cream shop that is open all year round. Those investments would generally be high in the warm months and low in the cold ones. Subsequently, your portfolio would also rise initially but decline when sales declined. However, this could be counterbalanced. There’s a high chance that in the cold months, when it rains, shares in an umbrella shop would jump up (due to higher demand). If you were invested in both, the rise in one would make up for the fall in another. But over the long term, you get the benefit of both rising. Which would be far less risky for you as an investor. This is a tricky thing to do on your own so it’s best to get in touch with a professional financial planner to help.

The benefits of diversification include:

• Minimises the risk to your overall portfolio
• Exposes you to more opportunities for return
• Safeguards you against adverse market cycles
• Reduces volatility

Things to consider when investing

The markets are always subject to volatility, according to what’s going on in the world. To be a successful investor it’s important to take a pragmatic approach. One thing that will be a bumpy road is the global economic recovery from the pandemic and with rising inflation and Russia’s attack on Ukraine on top of this, it is making investors worry. But please don’t panic due to uncertainty. Hold your ground, stick to your plan and don’t let your emotions influence your decisions and choices.

Here are a few key steps that we think you should consider to ensure you can make the most out of your money:

1. Find out your attitude to investment risk
2. Understand the relationship between risk and return
3. Diversification
4. Take a long-term view… it’s time in, not timing
5. Be patient
6. Avoid trying to time the market
7. Have a strategic approach
8. Our last step of advice is to get in touch with us—we can help you with everything we’ve mentioned. You can do so by emailing enquiries@pen-life.co.uk, or alternatively, call us on 01904 661140.

If you would like to order a copy of our ‘Why You Need A Financial Planner’ guide, please click here.

Please note:

The FCA does not regulate, tax planning, estate planning, inheritance tax planning, cashflow modelling or wills. The value of your investments can go down as well as up, so you could get back less than you invested.

All information is correct at the time of writing and is subject to change in the future.