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Investor tips for when markets 'plunge'

Thursday 3rd September 2015

By Frazer Wilson, Senior Consultant at Thomas Miller Investment
Having seen markets gradually improve over the last six years, we have all become used to inflation busting returns, so what happens when volatility returns? How do investors navigate future volatility?
Here are some tips to help investors survive the volatile markets:
Don’t panic 
When markets fall, they often do so quickly and recover slowly. Market crashes will always make the news, however the recovery doesn’t quite seem to make the front pages of the newspaper. Take stock and do not make any rash decisions
Review your time horizon 
If you need to access assets in the short term (usually within 5 years), then be careful about using anything other than cash, even if rates are low.
Remember the basics 
If you invest into anything (stocks and shares, property, antiques, cars, etc) the value will fluctuate. There are no guarantees in this game but lets take what we do know which is that we should buy when assets are cheap and sell when they are high. However, most people tend to do the opposite.
Balance is key 
As the old saying tells us, don’t put all your eggs in one basket. A diversified portfolio will stand you in good stead.
If something seems too good to be true, it probably is. 
We are all now exposed to “investment opportunities”. Our advice is to be very careful, especially when they look too good to be true.
“Sprat to catch a mackerel” 
Plenty of organisations offer a “special” offer either for a small sum, or for a short period of time. Once people deposit their funds (either in cash or investments) they often then leave things where they are. Don’t do this – review the position regularly.
What’s your Plan? 
Ask yourself the following questions; How much can you afford to invest and over what period? Are your assets structured in an appropriate way considering your tax position? When was the last time you reviewed your Will? Can you afford to gift assets to your family? Are the new flexible pension rules suitable for you? Could you afford the potential costs of care?
The answers will be specific to you and will depend on your future plans, objectives, other assets etc. Remember that we are all likely to live longer in the future, so make sure you have a plan. 
Past performance is no guide to the future
The world is changing so we all need to be aware that investments that have previously performed well may not be the best place to invest at present. 
Attitude to risk / Capacity for loss? 
Not all investments have the same level of risk. Keeping funds in cash for a long term also holds its own risks, especially when taking into account inflation over the medium to long term. What would be the position if investments don’t perform as well as expected. Will this impact your future plans. Do you need to take any risk to achieve your goals?
Be careful what you read 
Often literature is very generic and can not take into account each individual’s personal circumstances. Remember everyone’s position is different. 
*This article was written by Frazer Wilson, Senior Consultant at Thomas Miller Investment

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