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Spreading the risk

Sophie Foreman

Stock markets do not react well in times of uncertainty and the effects of the pandemic continue to pile pressure on financial markets worldwide. During periods of increased volatility, such as we have seen over the last few months, the importance of spreading risk and considering the longer term, remain constant investment principles.

Why diversify? Adopting portfolio diversification means you do not put all your eggs in one basket. A balanced portfolio contains a combination of different asset classes, such as equities (shares), bonds, property and cash. Equities have the potential to deliver higher returns than bonds, but bonds can provide an element of capital preservation for times when a more risk-averse approach is required. You can also diversify your portfolio further through choosing different geographical regions and industry sectors.

Don’t overdo it While building diversity into an investment portfolio is undoubtedly important, try to guard against over-diversification. This could make your portfolio unmanageable and could mean you spread your investments too thinly, resulting in a detrimental impact on potential returns.

Holding your nerve The pandemic has unsettled global markets and it has been an unnerving time for many investors. I’s important to remember that stock market volatility is inevitable, and markets can often rebound quickly once immediate issues are resolved. Experienced long-term investors know that the worst investment strategy you can adopt is to jump in and out of the stock market and sell up when investments have hit rock bottom.

Keep in touch Financial advice and regular reviews are essential to keep your portfolio in line with your attitude to risk and your objectives. This allows you to develop and continue to follow a well-defined plan. Your circumstances or objectives may well have changed recently, so please don’t hesitate to contact us with any questions or concerns you may have.

The value of investments and any income from them can fall as well as rise and you may not get back the original amount invested.

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Approved by The Openwork Partnership on 05-12-2024

Woldingham Financial Services Ltd is an appointed representative of Openwork Limited, which is authorised and regulated by the Financial Conduct Authority. Openwork Limited, Openwork Market Solutions Limited, Omnis Investments Limited and Openwork Wealth Services Limited are separate companies within the Openwork Group.  Openwork Market Solutions Limited is a company registered in England and Wales with a oompany registration number of 03799465, registered office Auckland House, Lydiard Fields, Swindon SN5 8UB

 

Openwork Limited is authorised and regulated by the Financial Conduct Authority, registered in England & Wales under registered number 04399725, Registered office Auckland House, Lydiard Fields, Swindon SN5 8UB

 

Omnis Investments Limited is authorised and regualted by the Financial Conduct Authority, reigstered in England & Wales under registered number 06582314, Registered office Auckland House, Lydiard Fields, Swindon SN5 8UB

 

Openwork Wealth Services limited is registered and regulated by the Financial Conduct Authority, registered in England & Wales under registered number 10266077, Registered office Auckland House, Lydiard Fields, Swindon SN5 8UB

The information on this website is subject to the UK regulatory regime and is therefore targeted at consumers in the UK.

Woldingham Financial Services is a registered company at Stac Pollaidh, Southfields Road, Woldingham, Caterham, Surrey, UK, CR3 7BG. The company number is 07409560.

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