No two crises are the same. Therefore, it is limited what you can learn from individual crises, but you can learn something of how you feel and react in individual economic and financial crises as an investor. Often we make the wrong decisions in crisis situations. Here are seven tips, which should lead you around the bumpiest situations.
1. Keep your head cool
The main advice in times of economic and financial crisis for investors is that you must keep your head cool. When markets begin to fluctuate strongly, it is important that you do not let your decisions be influenced too much by fear. Here it is important that you stick to your investment strategy.
2. Follow the plan
Many investments are long term, but often you'll get too nervous to stick to the strategy you have laid a head. Here it is important to relax and follow the plan for the investment. Trying to sell out at the right time to buy back in when markets are down, in most cases mean greater losses than staying in the market.
3. Be sure to adjust your investment
If the value of your investment certificates based on stocks is rising more than your investment certificates based on bonds, it may be that you should adjust your investments. Especially in times of market crisis your investments can be shifting rapidly, so it’s recommendable that you review your investments with an advisor at least once a year.
4. Stay informed
Remember to keep yourself informed about your investments and the factors influencing the market. For example sign up to newsletters from financial news media and other similar services in the financial world.
5. Spread your purchases and sales over time
It's a good idea to spread the purchases and sales over time. If you buy all at once, you risk buying, while the market is most expensive, or to sell when they are cheapest. By spreading investments over time, you can in declining markets (or bear markets) be glad that you can buy up at low rates. Conversely, in rising markets (or bull markets) you have the joy that you are getting started with investing.
6. Diversify, diversify, diversify
Always diversify investments between both shares for bonds and adjust them according to your investment and risk profile. If you buy securities in a mutual fund, you make it easy for yourself because you are guaranteed a great spread of your savings. A single investment certificate allows you to spread your investment over many different securities, for example, in several countries, industries, companies or bond types.
7. Mutual funds stay in the market
The legislation provides that investment and mutual funds should always invest accordingly to the investment profile of the fund. This means that a division based on U.S. stocks should not invest in Far Eastern equities. Simultaneously, it cannot sell off the entire book and go cash. Therefore it is important that you contact your advisor and sell your certificates if you have low expectations for a stock or bond market and do not want to be invested there anymore.
No comments:
Post a Comment