Simon Read: The markets might not be calm but you should be

Don't panic, it’s a wise idea to check investments regularly to ensure they are on target for your hoped-for returns

Simon Read
Friday 17 October 2014 19:23 BST
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A trader works on the floor of the New York Stock Exchange
A trader works on the floor of the New York Stock Exchange

Stock markets are volatile, as this week’s events have shown. But should you be worried about the falls in share prices?

Frankly, markets are always volatile – if not always this volatile – and seasoned investors know to ride out any storms. Indeed, some see the events of the past few days as a buying opportunity, based on the old saw that when markets panic, it’s time to buy.

But that doesn’t mean you should rush to open an Isa and stuff it with growth stocks. You should never make investment decisions based on short-term events.

If you haven’t used up your £15,000 tax-free Isa allowance yet this year, there’s no rush: you have until 5 April to do so.

If you have already used your allowance and are worried that your investment is shrinking daily then you need to think about your attitude to savings. If you can’t cope with the notion that your nest-egg could shrink, then you should keep it in safer places, even if it means lower returns in a deposit account.

The market falls are also likely to have hit your retirement savings, but by how much will depend on what your pension is invested in. If your pot is stuffed with aggressive growth opportunities, it may have taken a serious dent in the past few days. But that is unlikely.

It’s much more likely to be a balanced investment so that the higher-risk elements – which are there to give you the opportunity for good growth – are mixed in with safer funds or bonds that offer steadier, if much less spectacular, returns.

In short, you shouldn’t panic. It’s a wise idea to check investments regularly to ensure they are on target for your hoped-for returns. If they aren’t, you should adjust them accordingly.

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