Kingston based business, Holland Hahn & Wills, are expert financial planers who have been providing financial advise to residents in and around the area for over 30 years.

Katie Lovatt, Head of Marketing and Operations at HH&W's, focused her latest blog on advice to bear in mind when investments take a drop in value. Read on for her top tips for keeping your finances secure in such a situation.

In recent articles, I have talked about How to fool proof your investment returns and How to guarantee investment success, but today I want to focus on one key aspect – what to do when your investments drop in value?

And periodically they will.

Markets fall for different reasons; however, uncertainty is always a major factor. Issues such as health concerns (e.g. the recent global pandemic), inflation concerns, political upheaval and so on all cause price changes. Political and economic commentators like to have their say, and of course bad news sells better than good news.

Here are my key takeaways on falling investments:

1. The three buckets – Make sure that you split your money into cash, fixed interests, and shares (aka equities), and always maintain sufficient cash for a rainy day (how much is based on individual preference, but a good rule of thumb is two years' income).
2. Diversify globally your equity investments – This reduces individual company risk and individual country risk.
3. If you are not an investment guru, choose low cost, well diversified funds – at Holland Hahn & Wills we prefer evidence based more of a passive fund manager approach than an active approach, but whatever you choose, costs matter.
4. We live in a capital market economy, which means that when we buy shares in companies, and therefore participate in their risk, we should receive a return (also called a premium) for taking this risk, we just don't know exactly when? After all, if there was no return to be achieved there would be no point in investing.
5. Time in the market, not market timing – this is basically the same advice as above, statistics show us that if you miss the best few days in the stock market you miss a major percentage of your return, as markets do not rise (or fall) in a predicable or linear way.
6. Don't follow the crowd – behavioural finance indicates that we, the human race, exhibit a strong herd instinct (it's not just sheep), as a group, many investors buy high and sell low. Don't do this.
7. Sit firmly on your hands – what I mean by this is 'don't panic' when markets fall, there is a wealth of evidence that shows you will make a viable return in the long term. A buy and hold strategy could be considered boring, but it works.

At Holland Hahn & Wills, we will never recommend that you rush into any financial decisions. We don't handle client money and all recommendations are made via secure messaging or password protected emails.

If you want to know more about how our financial planning process can help you, or perhaps want a second opinion on your own planning or investment strategy please get in touch: 020 8943 9229 or visit our site at www.hhw-uk.com. 

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