Caption: Louise Smith
I have had several queries lately from clients concerned about the volatility in world stock markets we have seen since the summer of 2015. Markets have recovered somewhat in recent months but are still some way from the highs we saw in the first half of 2015.
Investor sentiment often results in clients switching investments during times of volatility, for example into cash or lower risk investments when markets fall, and similarly into higher risk investments when markets are performing well, in a hope of catching those higher returns. However, past performance data shows us that this strategy rarely works, and can, in fact, be disastrous.
Buy and hold is an investment strategy whereby an investor holds securities for the long-term, regardless of short-term market fluctuations. Although this term is usually used in relation to direct equities rather than unit trust funds, the theory behind it can be applied to any type of investment which fluctuates in value over time.
Please open the PDF document at the bottom of the page to read my full blog and to see the performance comparisons.