An emotional trade off: October’s markets
Please note this blog post was published over 12 months ago and so may not include the most up-to-date information, for example where regulation around investing has changed.
If you’ve been paying attention to the markets this month, you may have noticed it’s been a volatile time for investments. It’s important to understand what is happening in the current markets and whilst sudden drops can seem scary, it’s essential not to let your emotions take over when investing.
Market movements, although clearly uncomfortable, are normal when investing and what we have experienced in October we believe will not have relevance when investing for the long-term.
What’s been happening in the markets?
Throughout this year, there have been many tests for investors with trade tensions, geopolitics and trade wars all coming at the same time. However, overall, the economic picture has been and still is strong allowing interest rates to rise within the US. The US has been significantly ahead of other markets and some investors felt that it has potentially advanced too far, leading to the volatility we have recently experienced.
What does this mean?
Increased levels of volatility can be uncomfortable, but investors with longer term goals and a higher tolerance to typical market fluctuations should take a rational approach. As Investment Managers, it gives us the opportunity to buy assets at lower prices, giving us more opportunities for growth in the long-term.
What should I do?
There is always an emotional trade-off when investing. There will be periods of market volatility, which may make you feel uncomfortable. However, remember that, it’s not about timing the markets, but time in the markets that is important.
Take, for example, our Balanced Portfolio, which has experienced annual growth of:
1 Oct 15 – 30 Sep 16 |
1 Oct 16 – 30 Sep 17 |
1 Oct 17 – 30 Sep 18 |
|---|---|---|
14.25% |
7.85% |
4.15% |
If you had invested in our Balanced Portfolio at launch, a little over 3 years ago, you would have seen 28% growth over that time.
As an investor, the key to making a good return over the long term is to stay invested, compounding returns and growing the value of your investments.
When you’re invested in a diversified Portfolio, where experts make investment decisions on your behalf, the correct reaction to ordinary market fluctuations is, actually, to do nothing at all.
We believe that the advanced diversification of our Portfolios, systematic processes and technology built for the long-term is the best way for investors to meet their investment goals and will continue to work diligently to achieve this.
With investing, your capital is at risk. Investments can fluctuate in value and you may not get back the amount you invest. Past performance is not a guide to future performance. Tax rules can change at any time. This article is not personal financial advice.
