Some of the long-term goals, such as retirement, would be for 10 years +.
Over a long period, the best returns are normally achieved from investing through “closed” investment vehicles, to avoid fluctuations and market declines. This should also provide you with diversification.
Key principles for decisions during market declines:
1. Market declines are inevitable
Time in the market, instead of timing the market is the key principle here.
2. Keep a long-term perspective
The average “bear” market is only 13 months, compared to the average “bull” market which is 72 months.
79% of IFAs (Independent, regulated Financial Advisers) advise clients to stay invested and avoid timing the market.
3. Beware of emotional investing
It is normal for Investors to expect to feel nervous when the markets decline and excited when they are frothing.
Keep your cool and stick with the long-term plan.
4. Stick to your plan
Creating and adhering to an investment plan is to avoid making short-sighted investment decisions.
The plan should include consideration of risk tolerance and long-term goal
Push your time horizon and think for the long term!
5. Diversification
There is no guarantee of profits through a diversified portfolio, but it does help to lower your risk.
Spreading investments across a variety of asset classes reduces the volatility of your portfolio.
6. Fixed income – balance
Bonds may not match the growth potential of shares but they usually show resilience during equity declines.
One can mitigate higher inflation by investing in inflation-linked bonds or in asset classes such as high yield or emerging markets which are higher risk but could generate a positive real yield.
7. Long-term rewards
Although stocks fall and rise in the short term, they have tended to reward investors over longer period of time.
Covid excluding, we tend to live longer. Therefore, why not plan for a more comfortable retirement. You can read our blog post on how to plan for retirement.
Start with saving at Thamesbak Credit Union.
Disclaimer: Thamesbank Credit Union does not provide investment, tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for investment, tax, legal or accounting advice.