11th August 2017 at 9:00am
When it comes to investing, buying low and selling high is seen as one of the best ways to make money. But trying to time the markets can be a dangerous game and catching the top and bottom end of things is extremely hard.
Source: Financial Express. FTSE® All Share (dividends reinvested 31/12/85 to 31/12/16). Figures do not factor in any charges.
As you can see the past 32 years – which is as far back as the index data goes – have offered exceptional returns for many investors.
But market volatility has undoubtedly caught out some investors, causing them to panic and sell, losing money in the process. It’s the consistent investors who have persevered and held on to their investments patiently who are likely to be reaping the rewards today.
Remember though, investment returns aren’t guaranteed and past performance should not be used as a guide to future returns.
Control your emotions
It can be easy to panic when you see the value of your investments fall, but it’s important to keep your emotions in check.
It’s important to monitor your investments regularly and keep making changes as required.
If you succumb to fear and sell, you’re likely to be selling after markets have already fallen and, importantly, before they rise again. That means you lock in your loss.
On the flip side, if you see markets doing really well, you might be tempted to buy in to them then but you could end up buying at the top of the market and your new investment could fall in value soon after.
After all, if the markets didn’t spot falls coming, why would you? Don’t try and time the markets: it’s better to focus on what you can control.
Spreading your investments across different asset classes and regions (diversification) can help you achieve the best possible returns for the amount of risk you’re comfortable taking.
Try to follow a diversified investment approach, be patient and remember you’re investing for the long term.
For more suggestions on staying calm and keeping your composure in volatile markets, read Three golden rules of investing during market volatility.
Keep a close eye on your investments
Any important event, wherever it happens in the world, may have an effect on financial markets. That’s why it’s important to monitor your investments regularly and keep making changes as required.
If you don’t have the knowledge or time to review them, then think about delegating management to an expert.
Remember, whenever you invest you could get back less than you paid in. Past performance is not a reliable indicator of future performance.
FTSE® All Share All rights in the FTSE® All Share index vest in FTSE International Limited (“FTSE”). “FTSE” is a trade mark of the London Stock Exchange Group companies and is used by FTSE under licence.
The information in this blog or any response to comments should not be regarded as financial advice and is based on our understanding in August 2017.