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Panic selling: Five investment tips to help cope with crises’ like coronavirus

Posted by Adrian Lowcock in Press releases category on 03 Mar 20

Being an investor when markets turn tough like recent weeks is stressful, there is no denying it. But it needn’t be a disaster for you or your portfolio.

Investing is an inherently long-term game. If your horizon is further than five or 10 years, the current falls will eventually just be a blip in your portfolio history. And if your horizon is shorter, such as for those approaching retirement, your portfolio should already have had some form of downside protection anyway. 

Adrian Lowcock says: “Investing is all about the long term, not what happens today. As such if you focus on the long term then it can help give you perspective on the short term volatility in markets and put any sell-offs in to context. 

“Such events are usually short term in nature, and markets tend to over-react as investors act on emotion not fact.”

Nonetheless, here are five key mantras to have in mind amid the market turmoil. 

1. Do not panic – It is clear that some investors are panicking and whilst an understandable reaction it is important to remember that making investment decisions based purely on emotions are rarely a good idea. 

2. Take some time – Give yourself some breathing space, take time to review the situation, think about what you are really trying to achieve with your investments and what, if actions you can take any now to help you achieve your goals. 

3. Get some insurance – As part of a diversified portfolio it is important to have some assets which tend to perform well when investors get risk-averse. This includes exposure to gold, government bonds and absolute return funds. These assets are unlikely to perform as well as investing in shares but they are good at capital preservation. 

4. Have some cash – It is always a good idea to have a bit of cash set aside so that you are able to take advantage of any big falls in markets. It is hard to predict exactly when markets will fall or indeed how far, but it is much easier to put money to work once the markets have fallen.

5. Accept the volatility – The fact of the matter is that investing in shares and other assets means the value of your investment will rise or fall depending on a wide range of conditions. Whilst it may be possible to predict some events and how markets react, it is not possible call them all right all of the time.  It is important to accept that volatility is part of the journey and take the rough with the smooth.”