With the political unrest both at home and abroad causing a slowdown in the economy, it’s inevitable that share prices will fluctuate. Volatile times like these can make investors feel uncomfortable, however, there should be no cause for panic. Times like these can present a good opportunity to review your portfolio and ensure it’s still aligned to meet your investment goals.
Are all your eggs in one basket?
It is the number-one rule of investing but it can need reaffirming. Is your portfolio exposed to a single asset class or world region? If your portfolio contains a range of different asset classes and is spread across different countries and regions of the world, the different elements can perform differently at different times – so if one is doing badly, another may well be performing well and so could help to compensate for any dips.
In other words, ride out the rises and falls. The attitude you have to any dips in your portfolio is important. Remember investing is for the long term, successful investors tend to be pragmatic and expect that, while there will be good times, there will also be some bad ones.
Avoid over exposure
Have a look at your portfolio as a whole as opposed to a fund by fund basis. Certain industry sectors will outperform others at different times so it’s wise to have a diversified portfolio. Take a look to make sure that your investments don’t lean too heavy on one sector, or indeed individual company, as certain fund managers will invest in the same individual companies.
All clients with assets invested with us and held on the Aegon Platform are entitled to become members of our Premier Club a free, added-value service provided by FDD. We will send you, initially and then twice-yearly, an information pack including a current valuation, an analysis of the constituent parts of your portfolio and factsheets for the funds you hold.
Reassess your goals
Are your investment goals the same as they were when you set up your portfolio? Does your portfolio still meet these objectives? For example, you may once have been wanting to grow your pot, but the time could be approaching where you wish to draw an income.
In summary, when a downturn strikes, stay calm and review your portfolio with care and with confidence, rather than be panicked into any radical and potentially unprofitable change.
This article is for information only and reflects the author’s views at the time of writing, which are subject to change. This should not be regarded as a recommendation or solicitation to invest. If you are in any doubt about the suitability of an investment for your needs, you should seek professional advice.