Successful investment is rarely about picking a bargain or seeing an opportunity. A clear plan is always vital.
It lets you start with your objectives – capital growth or income – and set your timescales. Then you can develop an investment plan to show you how much you need to invest, how much growth you need, and what level of risk you should consider.
It is actually a very scientific process, which can be much easier to arrange if you call on the investment expertise of a Continuum advisor.
But what has happened to your investment plans now that Covid has torn up all the certainties?
The stock market has fallen
Covid 19 sent the UK into a recession in the earlier part of last year. The Office for National Statistics reported that gross domestic product (GDP), the broadest measure of economic prosperity, fell in the second quarter by 20.4% compared with the previous three months – the biggest quarterly decline since comparable records began in 1955.
The FTSE fell as well, shedding 24.8% of its value at one point, and causing huge losses from many investment portfolios.
But your investments may already have recovered
But although the falls were frightening, the real losses were felt by those who panicked at the losses, and sold at the bottom of the market, crystalizing their losses, and missing out on the recovery, which was very nearly as dramatic.
Markets strengthened in June as lockdown measures were gradually relaxed and pent-up demand fuelled a rise in consumer spending. GDP grew by 8.7% in June alone.
The FTSE and other markets recovered with it. Many investors made up much of the ground they had lost asmarkets bounced back over the summer, and GDP rising by 16 % with the fastest growth on record. But it pays to be cautious. The roller coaster ride is continuing. The Office for National Statistics found the UK economy went into reverse in November, shrinking 2.6 % with some forecasters predicting a double dip recession following the resurgence of the coronavirus and new and tighter restrictions to combat it.
What happens next?
If Covid has shown us anything, it is that the future is unpredictable. Recovery could come dramatically quickly over the next few months, as vaccination programmes hopefully start driving down infection rates for good. Alternatively, the economy may limp along for most of the year before real confidence returns.
However, successful investment is never a matter of chance. At Continuum, we believe that it is time to review your investment plans, based on what we do know.
Spreading and diversifying rather than trying to second guess stock market movements may be a sound strategy for an uncertain world.
So, what should you do now?
If you feel that your investment plans have been derailed, you might need to look at how your portfolio is made up, and how much you commit to investment to help get it back on track. What’s more, the solution for you should be individual. Your own investment plans need to be based on your own circumstances and plans – as well as the shape you expect recovery to take.
At Continuum we can provide the expert help you need with your investments. Starting with a full investment review, we will help you develop the new plans you need for an investment world that is already looking rather different and may change again before Covid is finally dealt with.
The information contained in this article is based on the opinion of Continuum and does not constitute financial advice or a recommendation to suitable Protection products or 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.