Strategies to reduce risk during market tumult

Stock market

Buildingan investment portfolio requires commitment, patience, sacrifice and nerves of steel – especially when stock markets go into free fall. Certainly, the recent sharp sell-off in shares worldwide, triggered by fears of a global trade war between China and the United States and higher interest rates, has unnerved many investors. As have other events both further afield such as currency crises in emerging markets and closer to home – dare I say the word after the drama of the past few days – Brexit. A tsunami of factors that could cause further stock market disruption in the weeks and months ahead. The Telegraph shares some helpful tips:

  • Selling into a falling market rarely makes sense. If building long-term wealth is your objective, riding out the storms is usually the best strategy.
  • Often, when stock markets cut up rough, investors lose their nerve and turn off the contribution tap.  If your investment horizons are truly long-term – ten years or more – it will pay to continue investing.
  • While it can be difficult not to join the herd and sell investments when markets are sliding, sticking to a long-term investment game plan makes best sense. So keep dripping money into a pension and keep the standing order going with your Isa provider.
  • Funds with exposure to property, gold and bonds can also provide all-important diversification – although in the case of property and gold this is often through shares, not the physical assets.