Stock markets around the world are suffering a major period of volatility as a result of the COVID-19 outbreak. Although markets do not respond well to periods of uncertainty, what is certain is that volatility goes hand in hand with stock market investment; and although market movements can be concerning, we have all become much better at expecting the unexpected, experience has taught us that. On Budget day, both the Chancellor, Rishi Sunak, and the outgoing Governor of the Bank of England, Mark Carney, were keen to emphasise the temporary nature of the economic impact of COVID-19.
To navigate market volatility, it’s best to stick to your plan, diversify your holdings and very importantly, expect and accept volatility. Investors with diversified portfolios, who stay in the market, have historically and consistently experienced steady gains over time. Even though it can be difficult to ignore daily market movements, it is vital to focus on the long term and remember that volatility also presents investment opportunities.
As Rudyard Kipling wrote, it’s important to “keep your head when all about you are losing theirs.” Investment requires a disciplined approach and a degree of holding your nerve if markets fall. Investment professionals know that markets can be volatile and will inevitably go down as well as up from time to time. The worst investment strategy you can adopt is to jump in and out of the stock market, panic when prices fall, and sell investments at the bottom of the market.
Instead of being worried by volatility, the best strategy is to be prepared. A well-defined investment plan, tailored to your objectives, in line with your attitude to risk, that takes into account your financial situation, can help you weather short-term market fluctuations. Market volatility is a timely reminder to keep your investments under regular review.
We aim to manage the inherent volatility of markets, so your savings have the best chance of growing for the future – without giving you sleepless nights and whilst ensuring you aren’t taking too much, or too little, risk with your money.
The value of investments can go down as well as up and you may not get back the full amount you invested. The past is not a guide to future performance and past performance may not necessarily be repeated.