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Investing through the good, the bad, and the ugly

a man looking at his phone while listening to music and drinking coffee

When you have an itch, it’s natural to want to give it a good scratch. Even when you know you shouldn’t.

It can be a pretty similar story for life as an investor too: the temptation to check on your investments a little more often than you should – especially during volatile periods.

Over the past couple of years, markets have been anything but plain sailing – as they rarely are. In February and March 2020 you’ll have watched stock markets plummet as Covid took hold of the world. And then in the time since then you’ll have seen some pretty decent performance, even though the world has remained a very uncertain place.

That’s the thing with investing, it’s impossible to predict what happens next. It can sometimes feel like you’re not fully in control. But making rash and emotional decisions in reaction to market volatility could only derail your investment journey.

Ignore the ‘drama’ of markets

Markets are like rollercoasters – they can go up and down in a short amount of time. But if you’re investing for the long-term, it often helps to stay calm and ride it out.

Whenever markets do fall rapidly it’s all over the news. Some of the sensationalist headlines are enough to spook even the most experienced of investors – especially as behavioural scientists from the Decision Lab have found that we feel losses twice as keenly as gains. In reaction to a hard-hitting news story, you might make the hasty decision to pull your investments in the hope you can avoid further damage.

But, as history has shown, this could cause you to miss out on potential gains. If you take the last four decades, there’s been some big market crashes – Black Monday 1987, the bursting of the dotcom bubble at the start of the millennium and the 2008 financial crisis. But historically, many of the stock market’s best periods have tended to follow some of the worst days.

If you want to give your journey down the long-term road of investing a good go, it’s important to remain calm and avoid making rash decisions. Here’s a few things to think about if you’re ever feeling uncertain about your investments.

Avoid checking too often

The great thing about Portal is it gives you quick and easy access to your investments. But even so, that doesn’t mean you should check them every single day. As the legendary Warren Buffet once said, “I often make more money when I am snoozing than when I am active.”

Whilst it can be tempting to check your investments regularly, in reality it could be very unproductive. If you’re obsessively monitoring small and meaningless market fluctuations on a daily – or even weekly – basis, you might cause yourself unnecessary stress; and even harm your investment journey.

This doesn’t mean you shouldn’t check at all. A good thing you can do in this situation is set a limit to how often you check the performance of your investments. Instead of making it a daily or weekly activity, why not make it a monthly or quarterly thing?

And don’t forget, there’s lots of other things Portal is useful for too: why not check out another one of articles, how useful is the state pension during retirement?

In it for the long road

Investing won’t make you rich overnight, but it might give you a better chance of growing your money over a longer period of time. This is especially true if you don’t need your money for five years or more. It’s important to ask yourself what matters most – the returns you see in front of you today, or the returns you could see five years down the line?

When the going gets tough, it can be easy to lose sight of what’s important to you. That’s why you should keep your long-term goals in mind. Why is it you invested in the first place? Picture what it is you’re aiming for – that amazing retirement, a once in a lifetime holiday or a strong legacy for your loved ones. You could even write your goals down, that way they’re available to you as a constant reminder.

Your portfolio is personal to you

One thing to take peace of mind from is that when you first came to us, we helped you to set up your portfolio in a way that’s right for you. It was tailored to your personal needs and circumstances to achieve the right balance; taking a level of risk you’re comfortable with to help you reach your goals.

We know keeping calm when markets take a turn is easier said than done. It is your money after all. But keeping focused on why you invested in the first place, and not becoming derailed by attention grabbing headlines or unchecked emotions, could make all the difference.

In short: stick to your plan.

Economic and market conditions experienced in the past may not be repeated in the future. The opinions and analysis provided are for information only and do not constitute financial advice. With investing your capital is at risk.

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