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Portfolio falls can be unsettling

Here are some tips to help keep things in perspective at this challenging time for investors:

23rd June 2022

  1. Accept the uncertainty of markets – a well-diversified portfolio protects you from any one area of the markets suffering particular pressures. Your portfolio will probably be performing better than the headlines suggest.
  2. Don’t measure your portfolio’s performance from the previous top of the market, but over a longer and more sensible timeframe, and from where you started. The last few years have been really good to investors. Giving a little back is part of any investing journey.
  3. Try not to look at your portfolio too often. Get on with more important things in your life. Once a year is more than enough, but that takes some will power!
  4. Accept that you cannot time when to be in and out of markets – it is simply not possible. If you resign yourself to this fact, investing feels much less stressful.
  5. If markets have fallen, remember that you still own everything you did before i.e., the same number of shares in the same companies, and the same bonds holdings.
  6. Most crucially, a fall does not turn into a loss unless you sell your investments at the wrong time. If you don’t need the money, why would you sell?
  7. The balance between your growth (equity) assets and defensive (high quality bond) assets was established by your planner to make sure that you can withstand temporary falls in the value of your portfolio, both emotionally and financially. A recent fall in the markets does not change this.
  8. Be confident that your (boring) defensive assets will come into their own, protecting your portfolio from some of the pain of material equity market falls, if they occur.
  9. If you are taking an income from your portfolio, remember that if equities have fallen in value, you will be taking your income from your cash and then bonds, not selling equities when they are down.
  10. Your financial planner is here – at any time – to support you. They are a source of fortitude, patience, and discipline on which you can draw.

We appreciate these are unsettling times, but your best defence is to keep to your plan, remain invested in a well-diversified and robust portfolio and lean on your financial planner if necessary.

This too shall pass!’ as the legendary investor and founder of Vanguard, Jack Bogle, used to say.