Investing In Times of Uncertainty

Market volatility is inevitable; markets will always rise and fall. It is useful for investors to put any short-term market volatility into historical context.

This chart below of the FTSE 100 since January 1986 shows a series of significant events over the past 36 years, notably: 1987 Black Monday, 1990-1991 Gulf War, 1995 Barings Collapse, 1997-1999 Asian Financial Crisis, 2000-2003 Dotcom Bust, 2007-2008 Global Financial Crash, 2015-2016 Oil Price Crash, 2016 Brexit Referendum, 2020 Covid-19.

The index still has a long-term growth trend despite market shocks and rebounds.

Chart: FTSE 100 January 1986 to 26th October 2022 (with income reinvestment), source Trustnet/FE fundinfo

As investors, we are getting used to a variety of political, financial, and economic factors, and we are learning to look beyond the ‘noise’ to focus on what really matters. The key to managing risk and approaching investments is portfolio diversity. Instead of focusing too intently on short-term events and market fluctuations, it is important to consider longer-term timeframes.

Investing requires discipline and the ability to hold your nerve when markets fall. Long-term investors know that jumping in and out of the stock market, panicking when prices fall, and selling investments at the bottom of the market are the worst investment strategies.

To achieve your long-term investment goals, you must balance risk and reward. Diversification is intended to provide the potential to improve returns by choosing assets according to your risk level, objectives, and time horizon.

You must decide how much risk is appropriate for you as an investor. While strategies designed to reduce risk will be incorporated into the process of building a portfolio, it cannot be eliminated altogether.

In order to position your portfolio in line with your objectives, attitude to risk, and to develop a well-defined investment plan, tailored to your objectives and risk profile, you can seek regulated financial advice.

This information is based on our current understanding and is subject to change without notice. This article is for general information only and does not constitute advice.  Whilst information is considered to be true and correct at the date of publication, changes in circumstances, regulation and legislation after the time of publication may impact on the accuracy of the article.

The value of investments and the income from them can go down as well as up and you may not get back the amount originally invested.

HM Revenue and Customs practice and the law relating to taxation are complex and subject to individual circumstances and changes which cannot be foreseen.

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