Investments information

Over the past few months we’ve seen some volatility in global financial markets. This is a perfectly normal part of investing, as markets can be affected by all sorts of things. At the moment, it’s a combination of tightening monetary conditions, rising trade tensions between China and the US, and European political uncertainty. But the rise and fall of market prices is something that’s always happened – and our quick guide below could help you navigate the ups and downs of the financial markets.

How does the market affect investments?

Markets can be affected by all sorts of things. For example interest rates, inflation, economic outlook, policy changes, consumer confidence – and of course, politics. All these types of changes can make things uncertain, but the rise and fall of market prices are a normal part of investing.

Putting the figures into perspective

Let's take a look at 2018. Having experienced six years of stable growth, 2018 saw stock markets turn negative for the first time since 2011. At first glance, this chart could look a little alarming:

UK equities - graph of total return from 29 December 2017 to 30 January 2019

UK equities - total return from 29 December 2017 to 30 January 2019

But let’s take a step back and look at the same period in the context of the last six years – when markets last turned negative - and suddenly things might not look so bad:

UK equities - graph of total return over 6 years

UK equities - total return over 6 years (total return does not include the effect of any fees and charges)

Please note: past performance is not a guide to future performance. It’s important to stress that investing is for the long term; here at Nationwide we suggest investing for a minimum of six years.

So, although we live in uncertain times, follow our top tips for looking after your investments.

I’m still concerned about my investments. What tips can you give me?

There’s always something that can potentially affect investments. However, if you follow our tips, these could help you look after yours no matter what’s happening in the world.

Don't try to time the market
No-one can predict what the markets will do next. Selling your investments when prices have fallen could result in a permanent loss. Fund managers work hard to exploit these downturns in the market to ensure your investment makes the most of any opportunities during uncertainty.

Consider regular investments
By investing on a regular basis, you'll buy assets at a different price each time you invest. This can help smooth out the impact of the highs and lows of market movements. Regular payments into your investment may help increase the chance of purchasing assets at a low price.

You might want to consider phasing any withdrawals you need to make
If you know you’ll need access to your money in the next 6 months, doing this gradually may help, as values can change in a short period of time during volatile market conditions. Plus, phasing any withdrawals can also help minimise the inconvenience of being unable to access your money if a fund temporarily suspends trading. This can sometimes happen in a volatile market, as it allows funds to dispose of assets in an orderly way, protecting remaining investors in the fund. This is quite common within property funds, where the underlying assets aren’t easily tradeable and take time to dispose of.

Diversify
A well-constructed investment portfolio can help minimise investment volatility. The key is ‘diversity’. This means investing with different assets and fund managers. Or invest in a single fund like our Primary Fund range, which will do this for you. It invests in different underlying funds, within different asset types, across a range of geographical regions and fund management styles. In other words, you won’t be putting all your eggs in one basket.

Make sure your investment plan is up to date
Your investment plan or strategy should be in line with your tolerance to risk, ability to absorb loss, time horizon and investment goals. Making sure your plan is current may help you ride out any unpredictability.

For this reason, it's important to regularly review your investment portfolio and change any parts of your investment strategy, if necessary. For example, you may decide to put off that planned purchase until a later date when market conditions have settled. Or it may mean considering a different approach to risk.

We're here to help you achieve your financial goals. So if you still have any concerns or questions either about your portfolio or investment plan, please contact a Financial Planning Manager. They will be happy to speak to you about your options, and make sure your investments remain right for you.

This is not intended to promote or provide a recommendation in relation to our investment service. Any comments made are intended to provide general information only. If you would like any further information, please contact a Financial Planning Manager.