10:45 AM August 26, 2022
I have an investment portfolio that is worth about £500,000. With inflation going up, spiralling oil prices and no sign of global economic recovery, I’m really worried about losing my money. Should I move my money into safer things like bank savings?
Matthew Beck of Smith & Pinching responds:
I’m not surprised you are feeling nervous – these are challenging times – but please don’t make any knee-jerk reactions to what is going on. It’s important that your investment strategy looks to the long term: if you look at the performance of markets over the years, you will often see an overall upward trend even in the most volatile of years.
For example, in 2020 markets dropped 34pc during the year but recovered to show an 18pc rise by the end of the year. If you look at the past 10 years, investment growth has, in the main, been positive and steady.
Putting your money into cash savings accounts may sound like a better option, but it’s important to remember that these accounts offer interest rates that are well below the rate of inflation – especially at the moment – so your money will lose value over time. Equity investing will normally offer a better chance of inflation-busting growth, although that cannot be guaranteed.
I think that you should review your investment portfolio to ensure that it is right for you. Your portfolio should not only be diversified to spread investment risk, but should also be suitable for you in terms of the overall level of investment risk you are taking and its potential ability to meet your objectives. Your attitude to risk will change over time so I suggest you review that as well as the content of your portfolio.
Planning is the key. I strongly suggest that you meet with a Chartered Financial Planner to build a tangible, personal and achievable financial plan that will keep you on track to deliver the growth you need to meet your targets. Your financial plan will identify and quantify your targets, and assess your attitude to investment risk. Your investment portfolio can be adjusted to meet the requirements of your plan.
Your financial plan shouldn’t, however, be a static thing. You should review it at least annually to make sure your targets are unchanged and that it is delivering the performance needed to achieve them.
Any opinions expressed in this article do not constitute advice. The value of an investment and the income from it could go down as well as up. The return at the end of the investment period is not guaranteed and you may get back less than you originally invested.
For more information, please visit www.smith-pinching.co.uk