Worried about stockmarket ups and downs?
Stock market investments go through good times and bad. Sometimes, this can lead investors to consider selling investments and retreating to options like bank deposits.
Here are our 3 keys to successful investing during stormy markets:
- Keep an eye on the long term – Stock market investments should be held for 5 years or more. It takes discipline to hang on during volatile times, but you are likely to be well-rewarded for this.
- Diversify – this means spreading your investments to reduce the impact of ups and downs. So for example, if you have share funds (like our UK Growth Trust or Sustainable Leaders Trust), think about adding bonds (like our Corporate Bond Income Trust).
- Use a regular savings plan – Investing a small amount each month, rather than a one-off lump sum, is a great way to help smooth out ups and downs. You benefit from ‘pound cost averaging’ since you are buying into the market over a period of time. This cushions you from the dips in the stock market because you are buying units at a variety of prices. But it also means that as your whole investment is not immediately exposed to stock market fluctuations, it will not benefit fully from an increase in the market.
The cash alternative?
Cash or deposit accounts are useful if you need short-term access to your money or if you are not particularly concerned about growing your savings. However, leaving your long-term savings in cash can lead you to miss out on the higher potential returns that the stock market offers. But remember that deposit accounts offer security of capital, whereas stock market-based investments can fall as well as rise in value and the capital is not guaranteed.
More information?
If you are thinking about other options for your long-term savings, have a look at the Cautious portfolios that we offer through the Investment Bond from Norwich Union and Platinum Bond Plus, our with-profits product.
Don’t forget, your Co-operative Financial Adviser can help you to make the most of your investments. Make an appointment online or call our UK-based Customer Contact Centre on 08457 46 46 46. We are open from 8am – 8pm Monday to Friday, and 8am to 5pm on Saturday.
Any advice from Co-operative Financial Advisers will relate only to a range of the products and services available from the members of the CFS Marketing Group, and a limited number of other companies.
