The financial world is still reeling from the effect of the coronavirus, which has caused volatility in the stock markets – and corresponding losses for corporate and individual investors.
The current financial situation is still far from clear, but if you have suffered losses one thing is certain – time is always money, and if you have sustained losses it is never too soon to start thinking about rebuilding your portfolio.
At Continuum we are looking at ways to get rebuilding your investment portfolio off to a head start.
Looking at the current market
It is an inescapable truth about investing that over the course of many years, traders will see periods of slow and steady gains cut short by sudden and sizable losses during corrections.
There is some truth to the old saying that the market takes the stairs going up but the express lift going down.
Even if you expect these losses to come much quicker than gains, preparing for them can be impossible. You may have a defensive investment strategy in place, with a portfolio diversified across many different asset classes, but when the market falls come as the result of something as unexpected as the Covid-19 crisis, being fully prepared is impossible.
Even in less troubled times, corrections come quickly and are always difficult to recognise in their early stages. The current market has shown how dramatic the falls can be. But what is the current market actually doing?
The FTSE and others are still looking volatile, but they may have reached the bottom. It is still too early to say, but some investors are returning to the market, because they believe that it is ready to head back up. It might be tempting to think that this is actually an opportunity to buy while stock is still cheap and profit from the recovery, but things may not be so simple.
Timing the market – investing when it has fallen and selling when it is at its peak sounds fine in theory, but rarely works in practice. The true market bottom is rarely clear at the time, and neither will the peaks. A market that has fallen could fall further. That’s why at Continuum, we never suggest you rush out and buy shares simply because they have fallen and hope for a quick recovery.
Instead, you need a considered investment strategy.
The Continuum approach to investment
At Continuum our approach is based on creating an investment strategy that is geared to your needs as a client, and your attitudes to risk aligned with your financial goals.
We will start with you and your attitude to risk. As a general rule the higher the potential returns on an investment, the higher the risk it will present. If you are worried about another fall in the market with shares that you currently hold, you may need to switch to investments with steadier performance.
The current depressed markets can help you get a head start on rebuilding your portfolio – but a considered investment strategy, rather than bargain hunting may be the way to do it.
Then we will look at diversification. In the aftermath of the coronavirus shock, all markets fell – but the usual pattern when one market falls is for another to be on the up. This means that you need a portfolio made up of various different assets, not simply shares in different companies, but holdings from entirely different sectors, and even from different asset classes.
The strategy we develop for you will be for the long haul. It will take time for the economies of the world to recover after the shock of the epidemic, and slow and steady growth is actually a positive route to rebuilding your wealth. Investing for a minimum of five years and preferably much longer may be essential.
At Continuum, we want to help you get your portfolio a head start on the road to recovery, with a long term investment strategy. There is no need to panic and making any investment decisions now might be a mistake, but it is important to make a start on developing the strategy that is right for you and your wealth creation needs.
Call to book an appointment with an expert from the Continuum team today.
The information contained in this article is based on the opinion of Continuum and does not constitute financial advice or a recommendation to suitable investment strategy, you should seek independent financial advice before embarking on any course of action.
The value of investments can fall as well as rise and you may get back less than you invested.
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