Market Volatility & Your Investments - What you need to know

The recent market turbulence caused by Brexit and the war on Ukraine may be causing you some concern about the performance of your pension and other investments, particularly with the rise of inflation and rising energy costs too.

We understand that this can be concerning, especially if you’ve seen your values fall as a result of these recent events. However, it’s important to consider that markets do move up and down (often referred to as volatility) due to major political events like this and they tend to recover over time. It is worth keeping in mind though, that past performance may not necessarily reflect future performance.

Volatility

Share prices had been volatile over recent months and for a multitude of reasons. It is worth considering equities or stocks and shares, are typically one of the more volatile types of investment and their value can rise or drop at a number of times. That said, over the long term, they can offer good growth potential.

Plan for the long term

When it comes to investing over the long term (usually between five and ten years), investments have historically risen in value. Furthermore, investors who’ve held onto their investments during periods of market ups and downs are likely to have seen their value increase.

However, the value of all investments can go down as well as up and there is always a risk that they may be worth less than you paid in.

Think before making any decisions

Many people tend to panic when they see the value of their investments fall, so speaking to the right people about your concerns, such as your Financial Adviser, can help you make the right decisions.

You may be wondering, why not get out while things are bad and just get back in when they’re better? Well, it’s worth remembering the following:

· Trying to predict the markets is extremely hard.

· Investors who give in to panic and sell during times of market stress often feel the pain of loss twice over.

Firstly, when they accept their losses by panic selling, and secondly when they miss out on the positive recovery.

Focus on what you can control

Whilst you can’t control how the markets perform, you can control how you’re invested. Periods of volatility are a valuable reminder of the importance of diversification – which means spreading your money across different types of active and passive investments as well funds offering a more smoothed return.

Spreading across different investments and even different geographical locations can help reduce the amount of risk you take and potentially receive more consistent returns, with fewer ups and downs.

Making informed decisions

Making changes to your pension plan or your ISA and its investments is a big decision and could impact how much you’ll have in the future. You may want to take professional advice before making any concrete decisions.

* This blog is for information and entertainment purposes only. It does not constitute advice in any way.