Recent market volatility, global challenges and low confidence – heightened by the EU referendum and potential economic slowdown – could be discouraging investors from making important financial decisions.
Michelle McGrade, Chief Investment Officer at TD Direct Investing, says this is amplified by a number of misconceptions among consumers and advises on the best approach in the final weeks before tax year end.
"Given all of the noise about market volatility, the sheer number of challenges out there, and misconceptions of their potential impact on investments, it is unsurprising people are unsettled. However, time waits for no-one and investors need to act now in order to make the most of their tax free allowance.
"There are a variety of options available to ensure we don't miss the boat. At the very least, for the more cautious investor, the safest-option is to look at Absolute Return Funds, which aim to deliver positive returns irrespective of market conditions through diversification across a range of asset classes and the ability to short where appropriate."
"To help provide clarity for investors, here's my top five ways to survive market volatility this tax year end:"
1. Volatility in the markets is often caused by short-term noise and it has little impact on the long-term performance for most diversified investment portfolios
2. Market volatility does not equal risk – the best long-term investing strategies take volatility into account and, in fact, when markets are volatile it can present buying opportunities – when people are fearful it is time to be brave and invest
3. You only make a loss if you crystallise that loss (by selling). Investors should never sell at the bottom – hold your nerve and stay invested, as I say 'selling on the low will leave you low'
4. Don't try to time the markets, as even professional investors struggle with this. It's the time spent inthe markets that is key. Though do put yourself in a good position to maximise opportunities if they arise – a diversified portfolio, with some cash to take advantage of market movements, is strongly advisable
5. Seek out alternatives to cash. The low interest rate environment means investors must look at alternatives such as equities or Absolute Return Funds that could provide a better return than cash.