Keep Calm and Invest On

The world of investing can be highly technical, and equally highly emotional. 

We generally don’t like to admit our emotional agendas in our professional lives, but we need to accept that they influence our decisions. The sooner we acknowledge them, the sooner we can choose more prudent approaches to investing, allowing us to keep calm and invest on.

When it comes to investments, it’s essential to stay focused on the bigger picture – especially when political tomfoolery has us itching to move investments out of the market and into cash.

The instinct to do this arises from the fact that cash investments are readily available for use and are free of most investment risks.

Cash is often considered safe, and at this time of year, when we have family around, some self-proclaimed pundits may be pushing you to pull out of the markets.

It’s crucial at times like these to remember that even though a cash investment may seem comparably safe, the returns don’t often beat inflation.

Various events in the economy of the time had many investors in a panic, and the call was to honour time in the markets and not revert to the timing of the markets (where we try to sell high and buy low).

Several years on, having weathered multiple ups and downs, balloons and crashes, the same adage rings true – it’s still about time in the markets and not the timing of the markets.

The challenge is that you are taking two market-timing risks if you wish to move your investments into cash and then back again once things have calmed down, and research shows that getting the timing wrong can be a massive blow to your portfolio. So – keep calm and invest on!

No one knows what the future holds for the markets, but since cabinet changes in the UK, there has been heightened volatility, and we can be sure to count on more. Riding this volatility and being invested for the long term in a diversified portfolio is how we at Northern Cross consistently tell our clients that they will earn inflation-beating returns.

What should you do instead of making an emotional decision?

  • Invest in a combination of asset classes in line with your needs, time horizon, and risk tolerance;
  • Invest in suitable multi-asset funds;
  • Understand and believe in your long-term investment strategy, and stick to it.
  • Keep calm and invest on…

If you would like to talk to me or anyone on our team, don’t hesitate to arrange a meeting to review your portfolio so we can revise and reinforce your financial plan’s stability, flexibility and durability.

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