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Help Your Investments Weather the Storm
As Brexit is still causing numerous problems for many, how it will affect us is still largely unknown on a more intricate level. As a result, there could be a storm approaching but understanding how to weather the storm is key to helping your investment thrive.
Investing successfully is all about looking at the bigger picture and over a longer- period while also considering diversifying the risk. This will give you money time to grow, however, it takes discipline and nerves of steel because you might be faced with a downturn in the markets. Investors understand that markets are volatile and so, they do move upwards and downwards. So, they choose to push emotions to one side and prevent it from getting in the way of logic. This means that they don’t move in and out markets or panic when prices take a tumble. They don’t even consider selling investments when they hit the bottom of the market.
The Importance of Diversification
There really is truth in the saying that you “shouldn’t put all your eggs in one basket” when it comes to investing. It is wise to spread your money around as a way of ensuring that poor performing investments do not affect your returns. If you have a range of assets as part of your portfolio as well as bonds, property, cash and shares then it is likely to perform better than one portfolio that has invested in one form of asset. The official name for this is asset allocation and this is where we can help clients where to decide they should invest.
Time in the Market
When it comes to investing, it is not about timing the market but more about the time you spend in the market. There is no point in dipping in and out as that is risky, so it is worth investing on a long-term basis. This gives your investments the time to grow and ride any fluctuations, especially if you slowly add money into the market regularly. This is known as pound-cost averaging.
This is all about purchasing shares at regular intervals as the advantage is that by investing over a period of time with smaller amounts, you will buy more shares at a lower price than you do when prices are higher. This then means that the buying price of the investment is averaged out.
So, make the right decisions, seek advice and weather the storm when and if, it arrives.