Responding to a falling market
When markets tumble, it’s natural to feel unsettled as you watch your portfolio fall in value.
Categories: The Smart Money
Market dips are unavoidable, but there are ways to respond constructively.
1. Remember, Pension Schemes Dip Too
Even professionally managed funds fall during downturns. All investors - whether institutional or individual - are subject to market cycles.
2. Buy in the Dip
When share prices fall, you can buy more shares for the same amount of money. If the company is fundamentally strong, this can improve overall returns over time.
3. Buy Every Month
Time in the Market, Not Timing the Market’ is a well-worn adage for a reason. Regular investing helps smooth out fluctuations and can build long-term value.
4. A Loss is Only a Loss if it is Realised
Investment losses only become real when you sell. Holding your nerve during volatility is key to long-term success. As Warren Buffett said, ‘You shouldn't own stock for 10 minutes if you don't feel comfortable owning it for 10 years.’
5. Review and Rebalance
Periodically revisit your goals and risk profile. If you’re approaching retirement, consider rebalancing towards cautious funds that back lower-risk assets.
Even when market forces seem beyond control, taking thoughtful action can help ensure your portfolio remains aligned with your objectives.
