Investing Personal Finance

Top Tips for Staying Smart When The Market Dips

The best investors out there all have this in common: when the market takes a downturn, they make sure everything’s in place for when it comes back up again… because they know that onwards and upwards is the only road to follow.

If you’ve been following the world of finance for the past few years, you’ll be more than aware of the increase in prevalence of phrases like ‘bull market’ and ‘bear market’. This can be as complicated as you wish it to be, but it all essentially boils down to bulls being periods of growth and prosperity, and bears bringing our periods of extended loss (during which the market falls around 20% or more). Right now, we’re in the season of the bull, and this particular bull has been raging happily for nine years so far. Sounds good? There’s a hitch (as there always is), and that hitch comes in the form of historical precedent. This time, that precedent is that bull markets are always followed by bear markets. Nobody knows when the bear will emerge from his cave this time… but everybody agrees that it’s a matter of if rather than a matter of when.

So, the downturn is coming – what should you do? Start stocking up on Russian diamonds and investing in Bordeaux wines? Sell all your property and learn to carve wooden spoons in Bulgaria? The short answer is, of course, no. Not least because history has clearly shown us one other thing, too, and that’s that panic leads to missing out on some seriously great opportunities for growth. Check out our top tips for success when the wobbles get wobblier… and learn how to make the most out of the bad times to set you up for the good ones.

DON’T PANIC!

Yes, we know: panic is a natural human response to moments of uncertainty or potential danger. If the bear market was a real bear, and suddenly invaded your celebrations of long-term economic success, the chances of drinks flying through the air, chairs and tables being stacked against doors, and riotous screaming would be very high indeed. However, panicking is just about the worst thing you can do when it comes to downturns in the market… as the stats show more than clearly.

When we were making WealthFace, we were careful to look very closely at the realities of the financial crash back in 2008. There’s no doubt that this was a tough time for everybody involved… but there’s no denying that the market most definitely did get back on its feet again, and the only real losers were those who panicked, sold off everything, and acted as though it was the end of the world. What should you do if this situation arises again? In a word, do nothing. While panic breaks out around you, feel safe in the fact that it’s almost absolutely certain your investments will see you through the storm stronger, and in a better situation than ever before.

Keep Timelines in Mind

If your financial goals are long-term (saving for retirement, looking to start a college fund, or building wealth for once you’re settled in the future), then what are you doing worrying about the here and now? The market may fluctuate and rise and fall, but it’s important to remember that the overall curve is emphatically an upwards one. Keep your eyes on the long term, and don’t allow yourself to get distracted!

Bears Come and Go. Bulls Stick Around.

Historically, bear markets are shorter – generally much shorter – than bull markets. The average length of a bear market is about a year and a half, and when you consider that it takes just three years for a portfolio to not only weather a bear market but fully recover its value, those bears start to not feel so scary after all…

Trying to Time the Market? You’re Chasing Unicorns When You Could Be Building Real Wealth

We know you’re smart investors (why else would you be on the WealthFace blog?). But – and we mean this kindly – you’re not smart enough to try and time the market. How do we know this? Because nobody is that smart… to the extent that it’s fair to say it simply cannot be done. The majority of research actually shows that those who attempt to make money by timing market fluctuations actually end up worse off in the long run, and WealthFace’s steady, solid strategies are far more likely to bring the results you want.

Remove Emotion From Investing

When it comes to weathering market fluctuations, there’s no room for emotional responses. Automatic deposits are the best way to completely remove human emotional reactions from investing, and that’s why robo-investors are such big news at the moment. Steady, reliable, logical and trustworthy, we’ve got every faith in our algorithm to bring you the best the markets have to offer in the long term.

Survive the Bear By Doing Nothing

WealthFace are really good at many things, but one particular thing our systems excel at is rebalancing portfolios. After a market downturn, it’s normal for your portfolio to be temporarily off-centre… which is where our automatic rebalancing system steps in to make sure everything remains on the route to success. We’ll rebalance your portfolio at regular intervals, making sure it doesn’t lean too far one way or another. That way, you’ll never be too exposed to one particular market sector, and you can maximise your returns the WealthFace way.

Now sit back, relax, and know that your investments are in the best possible hands. Bears? Let them come and go. We’ve got our eyes on the prize no matter what, and your best interests in mind through thick and thin.

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