Another very tough day in the markets after Friday’s brief lull (which we now know was a “Dead cat bounce”). So, what is going on? The answer is actually quite simple – no-one knows – which is why we are now firmly in the eye of one of the most chaotic investment storms we have experienced since at least 2008 (AKA the Financial crash).
What is now very clear is the economic hit is likely to be huge with implications on profits lasting years, indeed there may even be large casualties to come as large companies whom were struggling anyway can no longer make ends meet. So, what do our clients need to know?
- It is time in the markets not timing the markets! If we can fast-forward 5+ years, a well- diversified portfolio will always win out. Remember, whilst the price of your investment will fluctuate in the short term, the re-investment of your dividends is absolutely key in the long term to your wealth.
- Take any opportunities that come our way! Falling markets presents us with the ability to take advantage of low share prices. Simply put, there will be buying opportunities along the way for investors that hold their nerve. Again however, a long-term approach is needed.
- Can you make any changes to your portfolio? A big factor is where you are taking income. Can you reduce or stop your income for a few month’s? If you can avoid cashing in your losses (or crystallising as we call it), this will help avoid making a fallen portfolio worse.
- Diversification is always key! A simple way to explain this is, buy shares in an umbrella factory and also an ice-cream factory. Therefore, no matter the weather you will still make some profit. You can also ensure diversification by asset class, geography, sector and provider.
As always, with our ongoing advice service we will remain available to all our clients throughout these turbulent times and will continue to manage your wealth as effectively as we can. All the portfolio’s we advise on remain well diversified across the many asset classes with changes being made along the way by professionals. Get in touch with your local experts to help ensure your Financial Fortress!