Hello, I'm Clare, and welcome to Smart Investor...
the show that can help you get the most from your investments.
Although we can't offer personal advice...
we hope each episode will provide you with the insight and tools...
you need to become a smarter investor.
To give your investments the best chance of earning a return...
you need to be patient.
By committing to long-term investing...
you give your money the greatest chance to grow.
In this section, we'll take a look at slightly more advanced strategies...
to help you stay invested and manage your portfolio's performance.
Joining me to talk about it is Karen Barrett...
the Founder and Chief Executive of Unbiased.co.uk...
the platform that connects millions of people to professional financial advice.
Karen, why is it so important to stay invested and to stay in the market?
Historically, investments grow at a faster rate than savings.
Particularly in this low-interest-rate environment...
savings aren't really giving much opportunity for return.
Although history isn't a prediction of the future...
and there is a risk to investments...
generally, the faster growth rate means an opportunity to grow your wealth.
As you mentioned, there is a risk...
there is a chance you could see the value of your investments fall.
But is there anything you can do to help reduce that risk?
Absolutely. There's a couple of ways you can reduce that risk.
One is by diversifying the assets that you invest in.
That means you're not exposing yourself to only one geographic area or sector.
That means you're less affected by the stock market movements.
You can also regularly invest into your investments.
That means putting the same amount in each month.
This also smooths stock market volatility.
It means you can buy when the market is high as well as when it is low.
But when it is low, and if you're seeing the markets fall...
and the value of your investments fall...
it's understandable why a lot of people can lose their nerve...
and want to sell out.
How can you reduce that temptation to get out?
Absolutely. It can be alarming when you see the value of investments falter.
I think the main thing really is to remember...
you're invested for the medium and long term...
and there will always be dips and peaks in the stock market...
and the general trend is to look for an upward growth trend.
Of course, it can be really hard to time the market.
You need to be really careful.
When is the right time to take your money out of the market?
And again, when's it the right time to put back into the market?
You could easily miss some of the best performing days,
as well as avoid some of the worst performing.
So be very, very careful when you're thinking about doing that.
Additionally, where are you going to put your funds if you take them out?
What are you going to do with them?
There could be a potential cost impact of moving money in and out to consider.
Obviously it's about holding your nerve.
Presumably it's not just a case of putting your money in
and then doing nothing?
No, absolutely. You should always keep tabs on your investments...
and check they're doing what you'd expect them to do.
It's also a really good idea to schedule in some regular reviews.
Measure your investments against your plan and your goals.
Also, if you are worried about your investment performance...
or have questions on where you should be investing next or your strategy,
you should seek independent financial advice.
They can really help you, they're experts in that area...
and can give you confidence that you're doing the right thing.
Thank you very much for that, Karen.
To explore a little more about the principles of staying invested...
visit our website.