Take a long term view when you're investing.
Updated: Aug 28, 2020
Don't panic. Stay calm and think long term. Why a long term view makes sense.
There’s no doubt that 2020 will go down in history as a challenging year. As well as the advent of Covid-19, heralding ‘lockdown’ living across the world, this period of unprecedented turmoil has also caused markets to tumble, wiping £ billions off the value of stocks and shares. But in any period of financial unrest, there are always winners (as well as losers). The trick is to be on the side of the winners. And that’s where professional financial advice can really help.
All too often in a market turn down (known as a Bear Market), investors stop buying. Many rush to sell, preferring the ‘security’ of cash, frequently resulting in major losses. But did you know that a few investors choose to buy as much stock as they can? Why? It’s because they know that there are major gains to be made through buying at a low price and waiting for the market to recover.
It’s a fact that the cheaper investments get, the less people want to buy them. Sounds counter-intuitive right? Surely buying low and selling high is what everyone should be doing? But during a market downturn, people are fearful of immediate losses so prefer to hold their money in cash. However, history teaches us that markets always recover. Global financial experts Vanguard’s recent analysis shows that between Jan 1980 -Dec 2019 global market growth (known as a Bull Market) returns have more than made up for some significant Bear Market losses. This reinforces advice about how quickly markets can change and the importance of sitting tight during market uncertainty.
Here are a few top tips for surviving a Bear Market.
Tune out the noise.
Try not to listen to all the ‘doom and gloom’ in the press about market losses. Instead, talk to your financial adviser and take on board their professional advice.
It’s normal to feel worried during a Bear Market, but remember, markets can change quickly. In fact, even during the Covid-19 crisis, global equity markets quickly improved resulting in significant gains.
Focus on your long-term goals
Now is the time to focus on your long-term goals. If history is to repeat itself, we are likely to see longer periods of growth once this is over. It’s a fact that Bear markets are tough but so is missing out on the gains you could make in a Bull Market.
Don’t be tempted to panic sell. Although it’s worrying to see values tumble, you might not have to wait long to see a ‘good’ market day, so make sure you’re still invested to take full advantage.
Come and talk to the experts at Schofield about any worries and concerns. We’ll make sure you’re fully informed and are taking the right steps to make the most of your money.
Call us now on 01423 368000 or email us on firstname.lastname@example.org