As lockdowns ease and the world goes back to work, financial markets have bounced back and regained a sizeable proportion of the value lost as the crisis broke in March.
But as the economy restarts, many people remain wary of investing. There is still no vaccine, people are still falling ill – and every time there is mention of a new wave of infection, the markets begin to look nervous again. With continued uncertainty around the pandemic and its impact on asset values, investors have reason to hesitate.
But at Continuum we believe that there could be a bigger risk from doing nothing.
What exactly are the risks of doing nothing?
The financial climate remains uncertain, and if you decide to do nothing you can be fairly sure that you will avoid a poor investment – but you can be absolutely certain of not making any money either, and of wasting the most precious investment resource of all – time.
If you are an experienced investor you will already know the value of time, and that is time in the market, and not “timing the market” that matters for long-term returns.
Timing the market basically means buying stocks when they have fallen and selling them when they have gone back up – and ideally at their peak before they fall again. It sounds a promising system in theory, but in practice it can be a recipe for disaster. You simply cannot predict the next move of a stock or even an entire market. That stock that looks such good value now because it has fallen from its peak might be ready to head back up, but it could be just as likely to continue to fall and it could even cease trading altogether.
Investing always carries some level of risk. Without it, the rewards would likely be meagre. But when you try to time the market, the risks are out of your control.
You need time in the market. It should smooth out the peaks and troughs and deliver dependable growth.
Investing can be a tense business at the best of times. Investing when the markets are volatile dials up the tension. But sitting on the side lines waiting for a lower entry point may cost you the time you need to generate your wealth.
But it is not the whole answer. The other part of the solution is a proper investment strategy.
So how should you invest now?
As we have all seen, the markets have already rallied from the low points in March. Those who stayed invested have seen their holdings recover while those who dumped holdings in panic are the ones who lost out.
It demonstrates the importance of having a sound investment strategy and sticking to it.
At Continuum, we believe that successful investment is not based on luck and short term opportunities, but on a long term investment strategy based on proven principles and designed around your needs.
We work with you to plan an investment strategy that reflects your resources, your plans and your timescales, and your attitude to risk. We will use that strategy to help you build a balanced portfolio which spreads the risk, provides the opportunities, and makes investing simple.
We can even arrange ways to let you invest with a monthly contribution, which makes investing simpler still.
A call to us now can give you individual support from an advisor who will work to help you use the market, whatever direction it may take, by planning the style of investment portfolio you need and practical help to put it into action.
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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