Holding your nerve can pay dividends in the long term. When the world feels uncertain, it’s easy for most investors to get anxious. Market highs, the challenges we face, conflicts in the Middle East and eastern Europe, economic headwinds and potential political upheaval in a year of elections worldwide. However, investing during challenging times can deliver outsized returns in certain circumstances. Here are six ways to do it.
Take the Long View
Investment values always rise and fall but equities (stocks & shares) have tended to outperform other types of venture over the longer term. It’s important to think about your investment goals and your time frame for those goals. Although we can never truly know when we are going to need money back, using the “shoe box” concept can help you to allocate available income for a variety of needs over the short, medium and long term. Sensibly utilising the longer term can also help you maximise returns, because financial markets often have peaks and troughs. Try not to second guess what will happen in the short term with too large a percentage of your relevant investments. “Market timing” can be useful in smaller doses but “time in the market” is better managed with a greater percentage of your holdings for that longer term goal.
Spread Your Risk
It may be a cliché, but it really is crucial to avoid putting all your eggs in one basket. It’s important for investors to hold a very broad range of investment types to spread risk. Don’t be too exposed to any one sector or country and also consider different asset classes relevant to your risk appetite. In practice, the best way to diversify will depend on your individual goals and needs but a managed service can offer a variety of different types of portfolio which can help you access a spread of appropriate investments in a convenient and competitive manner.
Use Your Allowances
Although most residents of the UK and Europe will have the option of tax advantage investment allowances or retirement schemes which usually get additionally funded around tax-year end (such as ISAs, retirement accounts, Assurance Vie, the Livret and others), the expat has the benefit of a higher salary, housing allowance, flight allowances and as a result, more available income for savings after living costs to use wisely.
Take Advantage of Regular Savings
Drip feeding a fixed amount of money into your investments each month can work well, particularly during volatile periods. For one thing, this is a more affordable way to invest than having to find a large lump sum. It also provides discipline by setting up a regular payment method; you’ll automatically add to your portfolio each month and easily become used to not spending it! Also, regular savings can benefit from a statistical effect known as dollar-cost average. In months when investment prices have fallen, your fixed cash payment will buy more and go further.
Get Help
You are always in control of all your own money decisions. However, you don’t have to manage all of it, all the time. Good advice is to manage at least 80 percent by yourself and consider professional help for the remainder, by using an adviser with experience and expertise who can help you achieve the best results over different time frames. They can also provide crucial reassurance when the going gets tough. Feel free, without obligation, to ask about your options (via the QR code above). Another big advantage is you can remain focused on your day to day living needs while your longer-term goals can remain unnerved by short-term ups and downs.
Review Your Strategy
Staying focused on the long term doesn’t mean forgetting about your investments completely. Reviewing your strategy regularly is important. Profit taking and opportunities always present themselves through different economic cycles. Don’t overthink things, particularly during uncertain periods when so much is going on. Periodic reviews, ideally with a professional to bounce off, is a good option. Professional support in particular areas can be invaluable. Ask for genuine testimonials if you are ever in doubt.
