That uncertain feeling

When the market mood is volatile, what strategy should the ordinary investor adopt? Tony Lyons advises

Leading stock markets, except for Tokyo, are near their all-time highs, and look very vulnerable to a correction. Many economists are trying to talk up interest rates in London and New York, and that would be bad for both shares and fixed-interest securities. Yet interest rates remain low and inflation continues under control.

Talk to 100 financial advisers and you will hear 100 different views on where shares and bond markets are heading and what you should be investing in. Against this background, what are the ordinary investor and saver supposed to do? Play safe or plunge? But before starting any investment programme or changing an existing one, common-sense rules should be followed. Always have enough funds in the bank or building society to take care of any rainy day. Having to cash in an investment at the wrong time can leave the investor with substantial losses. Always make sure enough life assurance and other financial protection have been taken out to provide adequate cover.

The safest way to start an investment plan is to speak to a financial adviser. But before investing, check your chosen adviser's "terms of business" letter to establish whether the advice offered is truly independent or they are tied to a particular company. And make sure that your adviser has fully understood what you require and set out the costs.

Find out as much as possible before investing. If unitised funds are selected, look at the ownership of the management group. There is no foolproof way of guarding against dud investment managers, but the reputation of the investment house should ensure a reasonable degree of compensation for investors when things go wrong. Investors who are concerned about where stock market levels are heading are not obliged to commit themselves entirely to shares. Investing a set amount in unit trusts or insurance- linked investment plans on a regular basis can smooth out the peaks and troughs of investment. If you feel it is time to move out of equities altogether, most groups offer a low-cost way to switch funds. Pension funds, for example, often offer a choice of with-profits, cash or deposit- type fund. Capital growth bonds, which are usually linked to the performance of a major financial index over five or six years, could be a consideration, especially if there is a guaranteed return even if the chosen index shows a fall. Most but not all are based on the FTSE 100 share index or the Dow Jones 500 share index in the US. The Sun Alliance Carnation Bond is based on the Japanese stock market, which has been very depressed for the past six years but may well outperform over the next six. At the end of six years it will pay out 142 per cent of the initial investment plus half of any additional appreciation should Tokyo's Nikkei 225 index rise by more than 42 per cent.

"The key to successfully selecting investments is that before you can make money, you have to know how not to lose it," says Fred Carr of Carr Sheppards, a leading firm of private client stockbrokers and financial advisers. Carr Sheppards' booklet, Wealth Preservation, is especially for investors who have made significant gains and now want a portfolio offering a relatively high degree of predictable growth and income. It advocates a mixed portfolio of assets including index-linked securities which offer protection against inflation and small but growing income; endowment policy funds which offer low risk capital appreciation; and personal equity plans invested in zero coupon preference shares with fixed repayment values and maturity dates, and in investment trust income shares with above average income over their fixed life.

There is no such thing as a completely "safe" investment that does not avoid risk. But within normal limits and with common sense, you can go on investing even if the climate is uncertain

Start your day with The Independent, sign up for daily news emails
Life and Style
A monstrous idea? Body transplants might no longer be science fiction
Science An Italian neurosurgeon believes so - and it's not quite as implausible as it sounds, says Steve Connor
Sport
Demba Ba (right) celebrates after Besiktas win on penalties
footballThere was no happy return to the Ataturk Stadium, where the Reds famously won Champions League
Arts and Entertainment
Natural beauty: Aidan Turner stars in the new series of Poldark
arts + ents
News
Mia Freedman, editorial director of the Mamamia website, reads out a tweet she was sent.
arts + ents
Have you tried new the Independent Digital Edition apps?
News
people
Arts and Entertainment
The write stuff: masters of story-telling James Joyce, left, and Thomas Hardy
arts + ents...begging to differ, John Walsh can't even begin to number the ways
Sport
Jose Mourinho on Sky Sports
footballEXCLUSIVE COLUMN Paul Scholes: It was not a leg-breaking tackle, as the Chelsea manager had claimed
Finacial products from our partners
Property search
The FCA has today issued a consultation paper on its plans to tighten up consumer credit rules to give consumers greater protection on guarantor loans and in other areas

Payday loan companies must publish their rates, says CMA

A 20-month investigation concluded that a lack of price competition between lenders has led to higher costs for borrowers

Vulnerable consumers are defined as those with poor literacy skills, those who have caring responsibilities, people with disabilities, dementia or the old

Financial companies are not meeting the needs of vulnerable consumers, says City Watchdog

The Financial Conduct Authority said the industry needs to start thinking about solutions to these challenges

The FTSE 100 is inching closer to its record high but can it maintain these levels?

In 1999 stock markets quickly tumbled, losing many a fortune in the process

Tax-free savings: Freedom dawns for the junior savers caught in low-income accounts

The parents of six million children stuck with low-interest saving accounts worth more than £5bn will be able to move the cash from this April. But what are their options? Samantha Downes reports

How much lower will mortgage rates go?

Another day, another cut. As lenders compete to offer the cheapest deals, Simon Read asks if borrowers should jump in now or wait for further falls

Are bills ruining your family life? Try the lover's guide to coping with debt...

If you're in the red and can't find a way out, it's time to get some help. Neasa MacErlean hears that relationships will suffer unless you are open with your partner, but there are organisations that will put you on the right track and get you talking

How to complain: From retailers to energy suppliers, it's easier than you think

When companies let us down, millions of us just take it on the chin. Simon Read shows how to make your voice heard

The dark side of debt: Descending into financial desperation is not due to self-indulgence

Three stories reveal financial desperation that was born of other, serious concerns, from being a victim of sexual assault, to losing a family member
The Financial Conduct Authority took the unprecedented step of making Wonga cancel the outstanding debt of 330,000 borrowers and scrap the fees and charges of 45,000 more

Wonga escapes prosecution after sending fake threatening letters to struggling borrowers

The City of London Police’s investigation into Wonga was scrapped because 'there is not sufficient evidence to progress a criminal investigation'

Thousands of UK investors could lose out following collapse of Secured Energy Bonds

The collapse of an Australian company that sold energy bonds in Britain demonstrates the dangers of leaving the beaten track, says Simon Read
Thorn in our side? Some in the pension industry are warning of chaos in the run-up to 6 April

Simon Read: "Pension freedom is months away but if we don't act soon, the freedom may be to make an expensive mistake with our future"

The introduction of the new pension freedoms has been "alarmingly chaotic", reckons Nigel Green, chief executive of the financial consultancy deVere Group, He said this week: "The implementation of changes appears to be being rushed in a cynical attempt to woo older voters ahead of May's election."

Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Recruitment Genius: Telesales / Marketing Executive - B2B - OTE £25,000

    £17000 - £25000 per annum: Recruitment Genius: An opportunity to join this new...

    SThree: Trainee Recruitment Consultant

    £18000 - £21000 per annum + OTE £45,000: SThree: SThree Group have been well e...

    SThree: Trainee Recruitment Consultant

    £20000 - £25000 per annum + OTE £45,000: SThree: SThree Group have been well e...

    Recruitment Genius: Business Control Manager

    £36000 - £44000 per annum: Recruitment Genius: Encouraging more businesses to ...

    Day In a Page

    HIV pill: Scientists hail discovery of 'game-changer' that cuts the risk of infection among gay men by 86%

    Scientists hail daily pill that protects against HIV infection

    Breakthrough in battle against global scourge – but will the NHS pay for it?
    How we must adjust our lifestyles to nature: Welcome to the 'Anthropocene', the human epoch

    Time to play God

    Welcome to the 'Anthropocene', the human epoch where we may need to redefine nature itself
    MacGyver returns, but with a difference: Handyman hero of classic 1980s TV series to be recast as a woman

    MacGyver returns, but with a difference

    Handyman hero of classic 1980s TV series to be recast as a woman
    Tunnel renaissance: Why cities are hiding roads down in the ground

    Tunnel renaissance

    Why cities are hiding roads underground
    'Backstreet Boys - Show 'Em What You're Made Of': An affectionate look at five middle-aged men

    Boys to men

    The Backstreet Boys might be middle-aged, married and have dodgy knees, but a heartfelt documentary reveals they’re not going gently into pop’s good night
    Crufts 2015: Should foreign dogs be allowed to compete?

    Crufts 2015

    Should foreign dogs be allowed to compete?
    10 best projectors

    How to make your home cinema more cinematic: 10 best projectors

    Want to recreate the big-screen experience in your sitting room? IndyBest sizes up gadgets to form your film-watching
    Manchester City 1 Barcelona 2 player ratings: Luis Suarez? Lionel Messi? Joe Hart? Who was the star man?

    Manchester City vs Barcelona player ratings

    Luis Suarez? Lionel Messi? Joe Hart? Who was the star man at the Etihad?
    Arsenal vs Monaco: Monaco - the making of Gunners' manager Arsene Wenger

    Monaco: the making of Wenger

    Jack Pitt-Brooke speaks to former players and learns the Frenchman’s man-management has always been one of his best skills
    Cricket World Cup 2015: Chris Gayle - the West Indies' enigma lives up to his reputation

    Chris Gayle: The West Indies' enigma

    Some said the game's eternal rebel was washed up. As ever, he proved he writes the scripts by producing a blistering World Cup innings
    In Ukraine a dark world of hybrid warfare and murky loyalties prevails

    In Ukraine a dark world of hybrid warfare

    This war in the shadows has been going on since the fall of Mr Yanukovych
    'Birdman' and 'Bullets Over Broadway': Homage or plagiarism?

    Homage or plagiarism?

    'Birdman' shares much DNA with Woody Allen's 'Bullets Over Broadway'
    Broadchurch ends as damp squib not even David Tennant can revive

    A damp squib not even David Tennant can revive

    Broadchurch, Series 2 finale, review
    A Koi carp breeding pond, wall-mounted iPads and a bathroom with a 'wellness' shower: inside the mansion of Germany's 'Bishop of Bling'

    Inside the mansion of Germany's 'Bishop of Bling'

    A Koi carp breeding pond, wall-mounted iPads and a bathroom with a 'wellness' shower