Douglas Bridges, Independent Financial Adviser with Smith & Pinching, Chartered Financial Planners, advises on investment and savings in the age of coronavirus.
My investment portfolio has gone up and down over the past few months. They have recovered to just under the value they were in February, but I am anxious about how badly they might be affected again, particularly if Covid-19 isn’t dealt with. Should I sell all my investments and put my money into a savings account? I know that it will only get a low rate of interest, but at least I won’t end up with less than I started with.
Douglas Bridges of Smith & Pinching responds:
These have certainly been challenging times and it’s not uncommon post-Covid-19 for clients to think again about how much investment risk they are happy with.
Different types of investment have different levels of risk. If you are currently taking moderate to higher levels of risk with your investment portfolio, it is perfectly possible to reduce its overall risk profile. This will give you the potential of inflation-beating growth with a more comfortable level of risk.
You could sell your investment portfolio and put your money into cash investments such as savings accounts, Cash ISAs and products from NS&I such as Premium Bonds. What you must remember, however, is that with interest rates as low as they are at the moment, the real value of your savings may drop over time if you take inflation into account.
If you do sell investments now, at a time when markets are turbulent, you run the danger of locking in losses. It may make better sense to wait until markets have recovered further before making any changes.
Finally, it is possible to use a portfolio management service that allows investment specialists to adjust your portfolio within agreed parameters as markets change, with a view to matching or exceeding an agreed benchmark. This type of service aims to mitigate the impact of sudden drops in the market. Some advice firms offer this as an add-on whereas others, including Smith & Pinching, offer portfolio management as part of their core investment proposition.
Discuss your needs and goals with an independent financial adviser and, importantly, go through the process of identifying your investment risk profile. This is a process that analyses how you feel about risk, what risk you can afford to take and what level of risk you need to adopt to achieve your aims. An adviser will help you build a financial plan that is suitable for you and with which you can feel comfortable.
Any opinions expressed in this article do not constitute advice. The value of an investment and the income from it could go down as well as up. The return at the end of the investment period is not guaranteed and you may get back less than you originally invested.
For more information please visit smith-pinching.co.uk
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