MONEY MATTERS: Market meltdown puts investors on edge

With Ray L Best

The recent stock market volatility has some investors running for cover. Your stance will depend on what type of investor you are:

  • OH NO – I need to sell my investments now to minimise my losses …
  • GO GO – An opportunity to buy more at these lower valuations.
  • DODO – Crash, what crash!

It’s human nature to invest into rising stock markets and want to sell when markets are falling. Most investors would rather have a portfolio that makes small gains, rather than be subject to market volatility.

Past statistics bear this out as unit trust sales are at their peak when stock markets are high, and sales are at their lowest when the stock market is in decline.

It’s fear of loss that drives investor behaviour and explains why a highly intelligent client of mine once refused to invest more into the stock market (despite it offering exceptional value) until the stock market index increased by 30%; only then was he happy to invest.

Psychologically when stock markets tank, investors believe that the market will keep falling until they lose all their money.

Our emotions prevent us making rational decisions, so we try to “rationalise” our poor decisions.

Why is it worth emphasising this message right now?

We are nearing the end of the longest bull market in history and that means there will be increased stock market volatility over the next eighteen months.  It doesn’t help that Mr Trump and the Chinese are having an increasingly noisy and damaging trade war and the uncertainty surrounding Brexit doesn’t help either.

Some people prefer to look after their own investments, if it all goes wrong – they only have themselves to blame.

Others rely on a financial advisor. If you have an Independent Financial Adviser (IFA), then he should select the most suitable funds for you. Since 80% of collective funds have very poor performance, the opportunity to select funds from the worldwide universe of funds is clearly advantageous.

Be cautious of “advisers” that offer a restricted range of funds or only the funds of one company; the lack of choice will invariably lead to poor investment performance and that’s before their higher charges reduce performance even further.

In recent years there have been massive leaps in technology, providing top tier financial advisers with software that demonstrates the clear difference in performance between funds.

It not only demonstrates how your funds have performed over time. It will indicate which investment fund managers have the most influence on fund performance and help you compare any investment with an alternative.

Don’t leave your future to chance – you can now dynamically improve your investments using this very sophisticated investment programme.

There’s a catch – normally it would cost you a pretty penny to get a report like this, but we are a friendly lot, so we are happy to provide the first 10 investors to contact us – with a free report – DODO’s need not apply!

 

Past performance is not necessarily an indication of future returns, and future performance is not guaranteed.

 

 

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