Recent volatility in the global stock market has some investors wondering whether or not it makes sense to make drastic moves, such as selling-off some of their investments to limit their downside exposure. Each case is unique, so there isn’t a one size fits all solution that’s appropriate for every UK investor. In general, however, responding to market shifts with an extreme reaction can do more harm, than good.
Regardless of how much you hold and precisely where it sits, rash reactions to ups-and-downs in the price of stocks don’t necessarily improve your outlook. As it turns out, there are plenty of reasons to stay steady, rather than radically revising your approach. For starters, stock market returns are highest when viewed over the long term. In fact, that’s what makes stocks a better investment than other more conservative alternatives. Historical data tracking the performance of stock market investments proves the theory, time and again.
If you’re worried about recent market trends and need reassurance you’re doing the right thing, there is no substitute for timely information and professional advice. In the meantime, many analysts recommend a calm, measured investment strategy – even in the face of surprising market movements.
Balancing Risks and Rewards for the Best Possible Investment Performance
Managing investments is a lot like balancing other aspects of your finances. Much like finding equilibrium between your earnings and outgoings, balancing your investments reduces the risk of financial distress.
It’s fair to say, most investors would like to see their resources grow as much as possible. But it’s also true that any type of investing comes with inherent risk. As a result, the most successful investors are those who are best able to balance their exposure, while still bringing home acceptable returns.
Staying on course can be particularly challenging when the stock market quickly loses value or short-term trends track in the wrong direction. After a recent bout of stock market volatility, investors are being encouraged not to panic.
Effective investment strategies account for wide-ranging personal concerns, guiding each person to the best investment alternatives. What is your age and prospective retirement date? How much have you saved so far? Are your children approaching college age? Are you eager to step on to the housing ladder? What are your total annual household earnings? Answering these and other relevant questions helps discern your individual level of risk tolerance.
Young people, for example, have more time to grow savings on the way to retirement, so they can be more aggressive with their investments, bearing greater risk. If things do take a turn for the worse, they have longer to recover. Britons approaching retirement age, on the other hand, would take a bigger hit from an economic downturn, with less time to bounce back, before leaving the work force.
In the case of older investors, professional financial advisors would most likely recommend a suite of conservative investments, offsetting risk. Of course personal goals and individual investment preferences also influence where people put their money, but balanced exposure is an essential feature of long-term success.
For investors drawing income from their savings, short-term volatility in the global stock market can lead to cash flow problems. If you’re employed, several credit opportunities are available, providing short-term financing, without credit checks. Use payday loans to cover gaps or address unanticipated spending demands, but always follow-through with timely repayment. Failure to make good on your loan not only draws penalties and additional interest, but delinquency may also make you ineligible for future financing.
Global markets rise and fall, under the influence of wide-ranging economic factors. It comes with the territory, yet securities still provide the best returns, over time. If you have questions about recent stock market volatility or need timely financial information, use online resources and professional guidance to reinforce your understanding and stabilise your finances.