It’s fair to say over the last twelve months that investors have experienced their share of jitters. Trump’s successful bid for presidency and the extraordinary Brexit vote caused shockwaves worldwide, but did they significantly affect stocks and investments?
The simple answer is no – despite market jolts and hiccups, most investors have been able to ride the waves and stay on track with their long term goals.
In this post we answer some common questions about the nature of investing and why it offers a sound option to people looking to grow their money in the long term.
I have saved a sizeable amount of cash. Should I leave it in the bank?
While you might feel the bank is the safest place for your savings, the long term value of your money is likely to be eaten away by exorbitant bank fees, taxes on interest and rising inflation costs. Coupled with abysmally low interest rates, leaving cash savings in a low-interest deposit account will do your money far more harm than good.
I want to grow my money but I don’t know much about investing.
The best way to address this is to educate yourself about the various options available to you for investing and what they mean for your money. Think about your financial goals and what you want to achieve in the long term. Your financial advisor is also a great source of information. He or she can answer any questions you have and help you understand how investing works.
What about property – isn’t that a safer way to invest my money?
This all depends on your attitude to risk and returns. While property can offer investors solid returns it certainly isn’t a fail safe investment option. Property is also subject to market volatility and in property crashes investors have been known to lose hundreds of thousands on the market value of their investment. There is also the risk of overcapitalising on your property and your investment returns falling due to drops in rental prices, market valuations, taxes and rates. Your financial advisor can help you determine whether property investment will help you achieve your financial goals.
The market seems volatile. Is now a good time to invest in the stock market?
Uncertainty will always be a feature of any type of investment you make. There is no sure way to know that the tax rate and bank fees on your cash deposit won’t rise, or that your property won’t be subject to a market crash or that your share portfolio won’t experience dips. History shows us however that in most cases, stock markets recover from uncertainty, dips and troughs and that despite warnings of crashes and catastrophes that most of them don’t, and haven’t, eventuated.
Many analysts predicted dire consequences for the stock market in the wake of a Trump presidential win and vote for Brexit; the reality is however that markets soared upon the announcement of Trump’s presidency and in the case of Brexit, regained strength in a matter of days. According to S&P Capital IQ, historically, market shocks are brief and regain losses within an average of 14 days.
What’s the best way to get my investment portfolio started?
Give Hennelly Finance a call; we’ll take the time to learn about your financial goals, offer you a range of options for investment and answer any questions you may have. Get in touch with Hennelly Finance on 091 670 123.