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Declines in markets are normal when it comes to investing and it is a testing time at the moment for investors, particularly in international markets. Falls in the price of oil, slowed growth in China, renewed uncertainty in Greece and the potential for a rate increase in the US are all factors that make reviewing your portfolio a difficult task. While it is tempting to make changes when markets are weak, you should make an effort to resist the temptation. Why? Because your best decisions regarding investments should be based on savings you are getting and the investment plan you have in place. While it is important that you stay up-to-date with what is happening in investment markets, you should always understand headlines within contexts.
Declines in markets are normal when it comes to investing and it is a testing time at the moment for investors, particularly in international markets. Falls in the price of oil, slowed growth in China, renewed uncertainty in Greece and the potential for a rate increase in the US are all factors that make reviewing your portfolio a difficult task. While it is tempting to make changes when markets are weak, you should make an effort to resist the temptation. Why? Because your best decisions regarding investments should be based on savings you are getting and the investment plan you have in place. While it is important that you stay up-to-date with what is happening in investment markets, you should always understand headlines within contexts.
Now more than ever it is important to remember that your
investments are for the longer term and that a fund cannot be expected to
outperform all of the time in a global economy. With most of the main markets
participants on holiday you can be assured that they will be thinking about how
best to put their cash back to work when they return and there are plenty
of examples of funds that have moved from the bottom quartile to the top in a
short space of time, explained by positive changes in the markets or fund managers
overhauling the portfolio strategy.
This is a good opportunity recognise the expertise of your
financial adviser and look to them for guidance. Your financial adviser will be
in the best possible position to offer advice on the markets and valuable
industry insights. The volatility of the markets and its effects on the funds
in your portfolio have been carefully balanced based on your attitude to risk,
therefore with higher risk portfolios more volatility is to be expected and
will be particularly highlighted of late. However, you should also have a
portfolio that is sufficiently diversified to help weather these periods of
uncertainty. It will be difficult to stick to an investment plan unless you
understand exactly what you will get out of sticking with your invested funds,
regularly reviewing your investment plan and knowing what sorts of options are
available to you will ensure that your goals are always realised.
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