Mark Slobom, financial adviser Harpenden - Actions to take in volatile markets

Friday 28 January, 2022

We are currently experiencing volatility in the investment markets. For more information read our Market Summary.

As usual in times of market volatility, we urge caution in acting hastily. Ask yourself, does a short-term market correction affect the way you plan to live your life, manage your expenditure, or manage your portfolio? 

We prepare clients for short-term setbacks and recommend they invest for the long-term

Our clients are understandably concerned about the current equity market volatility, but we always recommend our clients maintain a long-term perspective when they invest, normally at least five years Portfolio expectations and potential returns are built into our long-term cash flow projections.  We always try to use realistic average return projections based on historical returns and the client’s acceptance of investment risk. These projections attempt to consider market falls – we’re not simply cherry picking the good years and using those figures.

Mark Slobom, independent financial adviser Harpenden and member of the Lonsdale Wealth Management Investment Policy Committee said: 

'It is worth putting the recent January market falls into context.  Many equity markets including the US were at or near all-time highs by the year end and given these circumstances equity markets were always likely to fall on any bad news.  Historically the worst days in the markets are often followed by some of the best and missing just a handful of days can affect your returns for years.  The danger in acting hastily is evident in the market volatility experienced in 2020, at the start of the Covid pandemic, as markets initially fell substantially in spring 2020 but rebounded by the year end.   It is always worth remembering that if you sell, you not only have to time your exit but also your re-entry. Even professional investors struggle with this.'

Mark Slobom, member of the Lonsdale Wealth Management Harpenden office continued: 

‘Our independent financial advisers use cashflow planning to review your savings, assets and consider your income and expenditure.  We use this information to set up a personalised Lifetime Financial Plan.  Our financial consultants can offer general investment planning, estate planning, pension planning, or protection advice.  We specialise in working with people coming up to retirement or who are managing their retirement income to achieve their financial goals.  We meet our clients regularly and speak to them on the phone to review their financial needs and discuss how their investments are performing. This is especially important when markets are volatile and investment values fall.  We always make sure our clients have enough cash to live on through a market downturn, so they are not forced to sell their investments.  Financial planning can also give clients confidence to make major life changes such as taking a sabbatical or taking early retirement.’

Concluding thoughts

1. If you are investing for the long-term do not panic about short term movements in the markets
2. Focus on what you think markets will be doing or where they might be in 5 to 10 years’ time, not on what has happened in the last month or what will happen next month
3. It is notoriously difficult and tricky to accurately time the markets, it is time in the market that counts.
4. Using cash reserves as a short-term measure instead of taking income from investments can be a sensible idea.
5. Having a diversified portfolio should work for you in the longer term.

In Summary...

If you are concerned about your financial planning and require financial advice, contact our independent financial advisers who offer a free initial financial planning consultation.  Complete our booking consultation form or call your local financial planning office.

Please note

The value of an investment will be directly linked to the performance of the funds you select and the value can therefore go down as well as up.  You may get back less than you invested. 

Please note the Financial Conduct Authority does not regulate tax advice.  Cash flow modelling and estate planning is not regulated by the Financial Conduct Authority

An investment in a Stocks & Shares ISA will not provide the same security of capital associated with a Cash ISA.

The favourable treatment of ISAs may be subject to changes in legislation in future

The levels and bases of taxation, and reliefs from taxation, can change at any time.  The value of any tax reliefs depends on individual circumstances.

For more information read:

Market Update - January 25/1/22

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