Is it still a good time to invest?
As an investor watching the news channels or reading the newspapers can make you feel quite uncomfortable at the moment and wondering is it still a good time to invest?
What with Brexit, political instability, interest rate rises and markets hitting record highs you may be tempted to either sell your investments or delay any further investment.
But is this the right thing to do?
5 ways to determine is it still a good time to invest?
#1 Go back to the reason you are investing in the first place
Remember investing should always be for the long term (10+ years, preferably 20+), anything else is just speculating and trading.
If your goal hasn’t changed and your investment strategy was built with this goal in mind then why change? There will always be a recession at some point and the stock markets will always hit record highs at some point so why worry?
As long as you are clear on these 3 points:
- Why you are investing.
- How long you are investing for.
- The risk you are comfortable taking with your investments.
Then just let your investment do its thing.
#2 Have your circumstances changed?
Say you’ve been made redundant at work or you’ve recently retired. These could be key points to re-evaluate your goals.
It could mean you need to take less risk with your investments or possibly more. Whatever the case this could be a time to make changes. Time to revisit your plan!
#3 Will you have to pay any taxes if you do decide to sell you investment?
By making a withdrawal from your investment will you incur taxes? There could be Capital Gains Tax to pay if your investment has performed well over the last few years. By taking it all out you could be crystalising a gain and could end up paying 20% tax on it.
Hopefully you have all your investments in investment products that are very tax efficient like pensions and ISAs!
One point to note here is that your investment decisions should never be solely based on what the tax position is. It’s far better to focus on the quality of the investment first before any tax considerations.
#4 Where else are you going to put your money?
If you’re not investing then you are probably either going to spend the money or leave it in cash.
Spending might be the way to go if you have achieved your goal or you know you already have too much.
As for cash, as long as you have all you need in cash for emergencies and short term spending, don’t add to it and earn nothing on even more of your money!
Yes interest rates have gone up recently but only by a tiny tiny bit and interest rates are still well below inflation which basically means you are losing money by holding it in cash.
#5 Are you feeding on too much news?
Bad news and sensationalism sells so media will always focus on the negative I’m afraid.
What’s more, financial institutions will want you to buy and sell all the time as that is how they get paid, through transactions.
Get the headlines if you have to but don’t spend much time worrying about them.
As long as you are clear on your investing goals, timeframe and risk as mentioned in point 1 above then it’s always a good time to invest no matter what the economic and political climate is.
That’s not to say there won’t be bumps along the road and times when you see your investments fall (sometimes by quite a lot). But over the long term the markets always trends upwards. So keep the faith. Anything else is just trying to time the markets and that’s impossible to do.
If you would like help answering your own 3 investment questions give us a call. It would be great to have a chat and explain more at no cost to you. You can also download our ‘Simply Investing Guide’ below.
Stock market linked investments and any income from them, can fall as well as rise and is not guaranteed. Any figures quoted are for illustrative purposes and should not be taken as a forecast or guarantee. Past performance should not be seen as an indication of future returns and clients may get back less than they have invested.