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How to prepare your portfolio for a recession
How to prepare your portfolio for a recession
As the coronavirus crisis begins to recede and the country tries to return to some kind of normality, the very likely prospect of a widespread economic recession now looms.
MM
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Market circuit breakers: everything you need to know
Market circuit breakers: everything you need to know
When extreme losses take hold, so-called “circuit breakers” are triggered, particularly in US indices such as the S&P 500. But what are these circuit breakers, and why are they activated? Stock markets in the USA have circuit breakers to act as a break on ultra-panicky indices. In times such as these they become an increasingly implemented measure to prevent the total collapse of share prices.
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Four tips to protect your portfolio in a bear market
Four tips to protect your portfolio in a bear market
How to react when markets tumble is something of a million-pound question. But there are things you can do, and lessons to be learned when indices turn red.
MM
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The case for investing your cash
The case for investing your cash
There seems little chance that the Bank of England will hike interest rates any time soon. And this is not good news for savers. It will reinforce the very modest rates currently available from cash deposit accounts and is a clear reason to look again at the merits of instead investing your money in the markets.
TS
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Underestimating the cost of living in retirement
Underestimating the cost of living in retirement
A recent survey conducted by Schroders suggests that Brits are failing to make sufficient provision for retirement; there is a mismatch between the income people believe they need in retirement and the actual cost of living, which means those who are not yet retired expect living expenses to take up just 34% of their retirement income, whereas in actuality they account for 49%.
DI
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How to build your perfect portfolio
How to build your perfect portfolio
The one key thing you need to know about your ISA is the deadline. If you don’t use your allowance by 5 April, you lose it. You can put up to £20,000 in an ISA in the current tax year. If you can afford to do that every year you can work out how much your tax-free fund will be worth after five or 10 years.
SR
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Investment Trusts vs. Mutual Funds
Investment Trusts vs. Mutual Funds
While most funds on the market are what are known as open-end funds, or mutual funds, there is another option that has become exceptionally popular in recent years. Investment trusts have traditionally been less popular than mutual funds, but this is changing. Recent figures from the Association of Investment Companies (AIC) show that investments in these trusts reached record levels in the last twelve months.
RM
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Lower risk investing
Lower risk investing
Investing your money always involves an element of risk but investors have a wide variety of both higher risk and lower risk investments to choose from. At times of economic or market uncertainty ‘defensive’ stocks typically increase in popularity.
TS
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FAQs
Dealing with market uncertainty and volatility? ›
Stay Invested
How do you handle market uncertainty? ›During times of market volatility, investors should focus on their time horizon and asset allocation. Good investing involves deciding on a long-term strategy and sticking with it. History has demonstrated that sources of market uncertainty are always different.
How do you handle market volatility? ›- Invest regularly — in good and bad times. ...
- Avoid jumping in and out of the market. ...
- Maintain a diversified portfolio. ...
- Don't forget history. ...
- Talk with your financial professional.
Market volatility, as measured through the standard deviation of returns, is an understood metric for the risk associated with investment (Ang et al., 2006, Mittnik et al., 2015). Consequently, volatility captures the level of uncertainty investors have about their likely returns.
How to mitigate market volatility risk? ›Diversifying your investments can help minimise your risk and reduce the impact of any stock market volatility. Heavy exposure to one particular asset or particular type of investment means that you're more susceptible to any fluctuations that occur.
What is a strategy to reduce uncertainty? ›According to the theory, we reduce uncertainty in three ways: Passive strategies: observing the person. Active strategies: asking others about the person or looking up information. Interactive strategies: asking questions, self-disclosure.
How do you keep calm during market volatility? ›- Short-term volatility is to be expected. ...
- Avoiding knee-jerk reactions. ...
- Focus on your long-term goals. ...
- The trend of the markets is upward. ...
- Your investments aren't the stock market. ...
- Get in touch. ...
- Please note.
- Don't Abandon Your Plan. A sudden drop in the market can have dramatically different implications for someone just starting their career compared to someone nearing retirement. ...
- Stay Invested. ...
- Stay Diversified. ...
- Take An Active Approach to Risk Management.
- Asset allocation: This is one of the famous strategies every investor must learn to balance out the fluctuation of the equity market. ...
- Rebalancing: ...
- Diversification: ...
- Constant Rupee plan: ...
- Position Size and Stop loss:
The key sources of market uncertainty businesses must consider include economic instability, political changes, technological disruptions, changing consumer behaviour, and possible environmental or natural disasters. How can market uncertainty affect a business's long-term planning and strategy?
What is the VUCA approach? ›
VUCA stands for volatility, uncertainty, complexity, and ambiguity. It describes the situation of constant, unpredictable change that is now the norm in certain industries and areas of the business world. VUCA demands that you avoid traditional, outdated approaches to management and leadership, and day-to-day working.
What triggers uncertainty? ›Uncertainty is the result of having limited knowledge about an occurrence or event, making it difficult to control, plan, or predict a future outcome, which can often be distressing.
How to overcome market volatility? ›Regularly investing a fixed amount over time, regardless of market conditions, can reduce the impact of volatility on your investment. This approach allows you to buy more shares when prices are low and fewer when prices are high, potentially lowering the average cost per share over time.
How to respond to market volatility? ›- Establish or revisit your financial plan. ...
- Bolster your emergency fund. ...
- Reassess your risk tolerance level. ...
- Make sure your portfolio is properly diversified. ...
- Talk with your financial professional.
Stocks have a tendency to be correlated; they generally move in the same direction, especially during times of higher volatility. Investors can hedge with put options on the indexes to minimize their risk. Bear put spreads are a possible strategy to minimize risk.
What are the ways of handling uncertainty? ›- They quiet their limbic systems. ...
- They stay positive. ...
- They know what they know—and what they don't. ...
- They embrace that which they can't control. ...
- They focus only on what matters. ...
- They don't seek perfection. ...
- They don't dwell on problems.
- Embrace Risk Management. Uncertainty is synonymous with risk. ...
- Foster a Culture of Agility. ...
- Focus on Innovation. ...
- Build Strong Relationships. ...
- Maintain Financial Flexibility. ...
- Examples. ...
- Case Study: Airbnb during the COVID-19 Pandemic.
It's better to just admit that you are afraid, and admit that there is, indeed, a good chance that you will lose money on your trades. You'll find that once you admit the possibility of loss, you'll feel much better, and control fears more easily.