As the rising cost of living, energy prices and the ongoing war in Ukraine continue to dominate the headlines, it’s all too easy to become overwhelmed with a sense of negativity when it comes to certain aspects of life.
Speaking with some of our valued investment clients over the last few months, they unsurprisingly have concerns about how to best navigate a way through volatile markets, rampant inflation and global political instabilities. It’s a topic on many people’s minds which is one of the reasons why I wanted to write this particular article and remind you that, if you’re an investor, it’s vital that you keep your eye on the far horizon. Here’s why.
Time in the market beats timing the market
In the past, you may have heard your independent financial advisor mention the well-known financial principle: time in the market beats timing the market. And it’s one of the best pieces of investment advice that I and my fellow advisors here at Jones & Co can offer at this moment in time.
Downturns are certainly not rare events, far from it. As an investor you must be prepared to weather a bear market because evidence shows that remaining invested over the long-term is one of the very best things you can do for your overall wealth.
Don’t miss the best days in the market
Of course, our natural reaction is to cut and run during a bear market. The fact remains, however, that many of the largest daily gains occur during such periods. I don’t need to say that if you miss these days by divesting into cash it would have a negative impact on your overall returns. And none of us want that.
It’s worth noting that, by reinvesting any dividends you receive, you can potentially double the overall return on your investment. With the majority of dividends being paid at regular intervals, if you attempt to time your entry into and out of markets you could potentially miss these valuable payments.
As an investor, you will understand that you should view your investments as an enduring element of your life. You’re in it for the long-haul and that means taking the rough with the smooth and remaining invested throughout.
By staying invested and focusing on your long-term financial goals, you will benefit from the growth in businesses and economy over time. I know it’s tempting to take money out of the market in the short-term, particularly during these turbulent times, but history clearly demonstrates that this action is very likely to deliver lower returns in general.
Don’t think that this is it and there is nothing that you can do to capitalise on this present situation. There are opportunities ahead. For example, there is long-term value in taking the opportunity, at present, of buying into lower value stocks due to the volatility the markets are currently experiencing. If you’d like to find out more, and finances are viable, don’t hesitate to talk to your advisor or contact any of the team here at Jones & Co for more information.
Questions or concerns?
If you’ve read all the way through to this point, thank you! If you have any specific questions or concerns relating to the topics I’ve outlined, feel free to contact me or any of my colleague who will be only too happy to help and advise. In the meantime, let’s take heed of this famous adage: keep calm and carry on!
Find out how bespoke financial advice can help you by contacting us for a FREE, no obligation consultation. Simply email: firstname.lastname@example.org, call 01246 550521 or pop into our offices on Glumangate in Chesterfield.
Mark Jones Dip PFS MCISI, is managing director of Jones & Co Independent Financial Advice.
Risk warnings: Pensions and investments go up or down in value and on encashment you could potentially get back less than originally invested. The contents of this article are for information only and do not constitute financial advice. Always seek professional guidance when investing in risk-based investments.