Overtake Inflation
Historically speaking, the stock market protects wealth when it stays ahead of inflation. Our advisers suggest stabilising your portfolio with companies that have a low price/earnings ratio, low debt, and a steady cash flow.
This also means that you overlook short-term volatility fears for long-term gains. Instead of a knee-jerk reaction to every small dip, focus on being invested for a longer duration. Companies that have experience with unstable macroeconomic situations and are competitively well-positioned are likely to do well.
1Consider this a buying opportunity
Markets are expected to recover relatively quickly, just like after the pandemic struck says Kareem Rathore, partner and financial adviser here at Hoxton Capital Management. “Stocks being undervalued due to the panic might be a good time to buy”.
There’s no way of knowing when the market has touched the bottom, but if you have the finances try to get your hands on the stocks that you’ve had an eye on.
However, if you do not have the money to spare, don’t be tempted to deploy your money. Instead, stick to your investment plan, stay on track and remain invested and patient.
2Stay invested
Panicking is no good. Instead of being scared off by the morning headlines, try to weather out the storm and wait for the recovery. The markets have seen and been through crises many times before. And while recessions are not uncommon, most investors who ride them out see their portfolios recover. Warren Buffett famously once said, “If you aren’t willing to own a stock for ten years, don’t even think about owning it for ten minutes.”
3Take advantage of Weak Currencies
A weakening currency drives up import costs and makes exports cheaper. It is also a fantastic buying opportunity for expats earning in a foreign currency such as AUD, USD, EUR & AED. There has been a % drop in value against GBP, which makes settling debts at home and paying off mortgages a little easier. Investing in the property market comes at a discount. All of this while making British local production competitive with higher output.
4Overall
In the long run, dips in the market are unseen as the years go on. The biggest mistake people can make is to be shaken by temporary setbacks.
Planning and strategising for volatile times takes understanding the markets. If you are looking to safeguard your investments but are not sure of how to do so, speak to one of our advisers today. With tailor-made guidance on your finances, you can be better equipped to deal with volatility.
About Author
Hoxton Wealth
May 12, 2022
