Diversification is paramount in uncertain times
The outbreak of coronavirus (COVID-19) has understandably been dominating the news headlines. Market fear over the escalating global spread of coronavirus has seen a sell-off across many asset classes. This period of market stress further emphasises the importance of diversification within portfolios. Investors’ objectives can rarely be met by investing in a single asset class.
It’s more important than ever to stay the course
The coronavirus (COVID-19) outbreak is first and foremost a human tragedy, affecting hundreds of thousands of people. It is also having a growing impact on the global economy. The markets have been extremely volatile as investors weigh the effect of the coronavirus against measures aimed at easing its economic impact. Therefore, it’s hard to say how this will affect investments in the short term.
Time in the market, not timing the market
During this difficult time, fear and worry are understandable, particularly as the coronavirus (COVID-19) outbreak led to the biggest daily drop in the FTSE 100 since the financial crisis of 1987. Trying to second-guess the impact of events such as the coronavirus or the recent stock market volatility – or even attempting to make a bet on them – rarely pays off. Instead, investors who focus on long-term horizons – at least five to ten years – have historically fared much better.
Don’t put all your eggs in one basket
Portfolio diversification is the foundational concept of investing. It’s a risk management strategy of combining a variety of assets to reduce the overall risk of an investment portfolio.
Time to explore your ISA options?
An Individual Savings Account (ISA) enables you to save in a simple, tax-efficient way, while generally giving you instant access to your money.
Use your ISA allowance or lose it forever
Even though the Individual Savings Account (ISA) deadline may be a number of months away, and despite the tax year date remaining the same year in year out, somehow it always creeps up on us. A tax year runs from 6 April one year to 5 April the next.
Avoid knee-jerk reactions by focusing on long-term investment objectives
Creating and maintaining the right investment strategy plays a vital role in securing your financial future. But we live in the era of the 24-hour news cycle. Human tendency is to prioritise negative over positive news content, and no one is immune from bad news. So as an investor, when you do get it, how do you process the information, deal with it and move on unscathed?
Wait for the bad weather to pass and stay the course
Volatility fluctuates based on where we are in the economic cycle, but it is a normal feature of markets that investors should expect. When stock markets start correcting, daily injections of bad news may sound as though it will never end. This can spark anxiety, fuel uncertainty and trigger radical decisions in even the most seasoned investors.
How to prepare your portfolio for inflation
Very low or very high inflation is damaging to the economy. The aim is usually to try and keep CPI at 2% in order to maintain a ‘Goldilocks Economy’ – not too hot, not too cold.
Should I invest into a pension or an ISA?
Investors looking for tax-efficient ways to build a nest egg for retirement often look to both Individual Savings Account (ISAs) and pensions. Tax-efficiency is a key consideration when investing because it can make a considerable difference to your wealth and quality of life.