Practical Advice About How to Survive the Ups and Downs of Your Investment Journey
With apologies to any clairvoyants reading this, the future is uncertain and no-one has an accurate crystal ball. Even with luck on your side (and maybe a good adviser too!), you should still expect to suffer your fair share of scares, setbacks and sacrifices on your journey to financial success.
INVESTING IS NOT A SMOOTH RIDE
There will be times when you lose money, when rules and regulations go against you, when it all feels unfair, or too complicated, when you have to make uncomfortable sacrifices. It won’t be a smooth ride.
If you plan well, and get some luck along the way, it will be a journey of two steps forward, one step back. Over a lifetime, that’s an awful lot of backward steps to come to terms with, plenty of opportunities to look back at with the wonderful benefit of hindsight and say “if only I had…”.
Whether you’re an optimist, pessimist or somewhere in the middle, this uncertainty will be a challenge you face. You can’t avoid it - it’s an inevitability of the personal finance journey.
YOU CAN SUCCEED IF YOU EMBRACE UNCERTAINTY
The good news is that you can put strategies in place to try to smooth out some of the emotional detours and distractions along the way.
Avoid the temptation of looking at your portfolio valuation too much - if you look every day, you’ll see plenty of ups and downs. If you look once or twice a year, you’re much more likely to be presented with good news.
Take out insurance to lessen the financial blow of unfortunate events - know you're covered for some of the main issues life can throw at you.
Keep a bigger emergency fund than you need - give yourself a much better chance of dealing with the unexpected.
Broadly diversify your assets - accept that some of your assets will go up at a time when others fall.
Avoid overextending yourself - leave yourself more options for the future.
Be more cautious in your planning assumptions - reduce your expectations of the investment returns you might get, the age that you might retire at, or the pension income that you might generate. Then be pleasantly surprised if you overachieve.
SLEEP EASIER AT NIGHT
If you accept that uncertainty is inevitable and build in a decent margin of safety, you’ll feel more confident that it will all be ok in the end. You’ll sleep much easier at night. And that’s got to be the ultimate aim of any financial planning that you do.
If you would like help building strategies to deal with your investment journey, please give us a call on 020 3488 9505.
The value of your investments can go down as well as up, so you could get back less
than you invested.
Tax and Estate planning is not regulated by the Financial Conduct Authority.