Worrying times are part of the journey

 In Investments

Once again, we wonder what winter has in store for us

Few people look forward to the onset of winter but this is now the third consecutive winter where we have approached the darker days with an additional layer of doom hanging over our heads.

For the last two years we have had to contemplate the unknown impact of possible new waves and strains of Covid and this year, although Covid has not gone away, a greater economic threat now comes from a combination of energy prices, general inflation and rapidly rising interest rates, not forgetting the capricious moods of Putin and his dwindling number of friends.

8 Tips to keep your investments in perspective

Here are some tips to help keep your investments in perspective as we head into another winter of uncertainty:

  1. Accept the volatility of markets – a well-diversified portfolio protects you from any one area of the markets suffering particular pressures. There will be times when 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 or twice a year is more than enough, but that takes some willpower!
  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 bond 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 assets was established by your FLP financial planner 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 should not not change this.
  8. Be confident that your (boring) defensive assets can come into their own, protecting your portfolio from some of the pain if and when equity markets fall.

Keep calm and carry on

These are worrying times, but they are not an unexpected chapter in the long-term investment journey. Your best defence is to stick to your plan, remain invested in a well-diversified, robust portfolio and speak with your FLP financial planner whenever you need some additional reassurance and guidance, we are always here to help and support you.

The value of investments may fall as well as rise. You may get back less than you originally invested.

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