‘DON’T PANIC’ MESSAGE TO INVESTORS DURING VOLATILE MARKET CONDITIONS

Savers should avoid panicking at recent market volatility, stay invested for the long-term, and take advantage of the general upward trend of the market – that is the advice from a leading regional investment expert.

Stuart Lawn of Lovewell Blake Financial Planning, who has spent more than two decades in the financial services industry, says that despite the current short-term market volatility, savers and investors should sit tight and avoid the risk of ‘locking in’ heavy market losses by panic selling - depending, of course, upon your requirements for capital or income, in the near-term future.

“Rising inflation, the Russian invasion of Ukraine, supply chain issues, commodity prices and the energy crisis have all combined this year to create what you might call a ‘perfect storm’, causing most asset classes to fall,” said Mr Lawn.

“There was a rally in July and August, but the recent ‘mini Budget’ has once again caused a bout of volatility, with the pound hitting a record low against the dollar.

“It is worth mentioning that these most recent issues are UK specific, which emphasises the benefits of a globally diverse portfolio, not least because currency issues can help companies with assets denominated in other currencies (most of the FTSE 100), and so investors could potentially benefit from increased returns.

“But there is a wider issue here: at times such as these, when financial markets are headline news and everything you hear seems to be doom and gloom, it is important to keep a level head, and not to panic.  Selling your investments in a period of uncertainty is very rarely a good idea.  Panic selling will lock in losses, and you will miss out on any recovery.

Mr Lawn says that investing should be for the long term, and that market volatility is part and parcel of investing.  “Large falls happen every so often, but once the issues that caused them are resolved, markets usually recover fairly quickly.

“It is important not to make any knee-jerk decisions.  Trying to ‘time the market’ is extremely difficult, and you will generally come off worse.  It is usually better to stay invested throughout, not least because history shows us that the best trading days are typically very close to the worst trading days.”

The best advice is to ensure your investments are diversified across a wide range of sectors and asset classes, and to adopt a long-term approach, says Mr Lawn.

“It is only human to worry about your investments during periods such as these, and everyone will have their own set of aims, objectives and risk tolerance.  It is important that your strategy reflects these – but the main message is to be aware, but not to panic during volatile times.”