After a strong 2021, this year so far has been tough for markets with volatility increasing significantly, leading to some big falls in global share prices.
There is no single catalyst for this, indeed January was a bad month for markets due to concerns about global inflation and the impact on interest rates, and this was before Mr Putin commenced his “special military operation”.
The war in Ukraine has been shocking and heart-breaking and we can only hope a peaceful outcome is reached soon. It has, no doubt, increased the general uncertainty and added more fuel to the inflation fire, as Ukraine is a large producer of important commodities such as wheat, grain and fertiliser.
It is times like these that are, again, a sharp reminder of taking the long term view when it comes to investing. Viewing your pension or investment at the moment may be painful, but unless your circumstances have changed, the advice is still to sit tight and try to ignore the short term valuations.
Your portfolio will be invested across a number of different asset classes, countries and sectors. This diversification will help mitigate the risk.
It is also worth noting that periods like this create “buying opportunities” for investors with a medium term view. If you have surplus cash in savings, now could be a good time to be talking to your adviser about investing.
Similarly, if you are paying monthly contributions into your pension or investment, you are getting more units for your money, which should lead to greater profits over time, so again, unless your circumstances have changed, keep the contributions going.
Stock markets will always have periods of volatility such as this, and it can be very unsettling. However, history has shown us that markets always recover and it can happen very quickly, as we saw with the “Covid Crash”. It is important, therefore, to remain invested so you can benefit from the upturn when it comes.
To add some historical context, here is a link to a document produced by First Trust based on the US stock market that highlights the difference in the length and returns of a “bull” (rising) market versus a “bear” (falling) market.
If you have any questions please do not hesitate to get in contact with your adviser.
The Wealth Management Team