The basics to investing

For some people Savings may seem easy to understand. You put money into a deposit based savings account, and it earns interest, even if the rate it grows at is not very exciting. Investments are a little more daunting, because as the year just gone has shown, the values of investments can go down as well as up, and you could lose some or all of your money.

2019 saw investment values looking volatile, and 2020 looks to have started in a similar style. However, at Continuum, we believe that investing is still central to potentially growing your wealth. To understand why, it helps to look at the basic principles.

Always invest for the long term

Investing works because it allows investors to buy into productive businesses and share in their potential profits. Investing for a minimum of five years and longer can potentially offset the ups and downs and let any underlying growth in the value of your investment work for you.

It might be possible in theory to profit from those ups and downs in the market by investing when markets are in a trough and selling when it hits a peak. In practice things are not so simple, because it is impossible to know just when those peaks and troughs are coming.

Always keep the big picture in mind

Of course, when you see that investment values have fallen, it can make you wish you had kept them as cash – but you need to look at the bigger picture. If your investments fell in 2019, you may have a loss on the year. But if you look back at how they’ve performed over the last five years, hopefully your loss will have been more than covered by your previous gains, however there are no guarantees.

You may have missed out on growth in 2019, but investing is a long-term game, so you shouldn’t focus on a small window when assessing performance.

Always ensure your risk profile is appropriate

All investments come with some level of risk, and it is important to understand exactly what this means. The risk for some investors is that your investment will lose some or all its value, although you can lose it all if the company you have invested into ceases trading. The risk is also about volatility. As a general rule the higher the potential returns the higher the risk, which means that the investment which could potentially make you a great deal of money has a bigger risk of losing it.

You must be comfortable with how much risk you carry in your portfolio. If you lose sleep every time the FTSE falls a few points, you may need to switch to investments with steadier performance.

At Continuum we believe that risk – and your appetite for it – is something that needs to be factored into your investment planning.  You need to be comfortable with the investment you have.

Always have diversified investments

Whatever your view of risk, you should never put all your investment eggs in one basket. Investing in a range of stocks and shares can help smooth out volatility, and a diversified portfolio will be made up of different types of assets, industries and locations. When one part of the market dips, another may well be rising, hopefully covering your losses.

We can actually make risk work for you by carefully planning how your portfolio is diversified.

Always get expert help

The world of investments can be something of a maze, and an expert guide can help you keep your money on the right track.

At Continuum our experts can combine a thorough understanding of the basics with a watch on the market. It means that we can help you plan the style of investment portfolio you need, and help you keep it current, and performing as it should.

We can help make investment easier, with services like our online portfolio which will help you see how all your holdings are performing, and our regular updates.

But most important of all we can give you individual support from an adviser who will work to understand you plans and to find the best way to invest to reach them.

To find out more, simply call us.

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.

Equity based investments do not afford the same capital security as deposit accounts


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