1. What is happening on the market?
Coronavirus has affected the financial markets very heavily. Although the market is buzzing, we advise investors to keep calm in this environment and stick to their investment plans.
2. What should I do about my investments now? Is it time to sell?These challenging times have left many investors wishing they had cashed out their investments earlier. In hindsight, it’s easy to blame yourself and others and regret not acting on your intuition.
But no one can predict market ups and downs precisely. This is why it’s good to stop and think about your original investment goal. Our general advice is to invest in equities in the long term, which usually means an investment horizon of more than 3 years. If you need money in the short term, you should not invest in the stock market in the first place. If you want to sell your investments because you’re nervous about strong volatility in the markets or you’ll need money in the near future, we would generally advise you to sell your holdings in increments and at different times to manage your risks.
3. Will the market decline even further? How long will the downturn last?
No one knows how the market will perform over the coming weeks and months. There’s a lot of uncertainty, which means that the market will likely continue to fluctuate going forward, too. We have seen similar volatility many times before and it’s always unpleasant. But in the past, the stock market and the financial system have made it through crises that have seemed worse than the current one.
If you’re worried about the current market situation but won’t need your money until later, you may feel like giving up on investing for a while and starting again after the market has recovered. However, you would likely risk selling too late when the prices have started to fall and buying too late when the prices are already going up.
4. I do not have investments yet. Is now a good time to start investing?
It’s always a good time to start regular saving. Regular saving brings security to your finances, does not require big income or initial capital, and is suitable for those who want to accumulate a reserve fund. By saving regularly, you can reduce the effect of market fluctuations over the long term, so you won't need to fret about market movements.
5. Can I temporarily pause my monthly savings?
When there’s a lot of anxiety and uncertainty in the markets, you may want to take a break from your regular monthly savings until the situation gets better. But the problem is it’s difficult to know exactly when everything will be back to normal. In other words, you may easily miss the turnaround. Investors naturally want to buy when share prices are low but it’s impossible to know when they’ve truly hit their trough. If you continue to save in funds as usual, you will pay less and less for your fund units and you will be well-prepared for the market recovery.
6. Can I lose all my savings?
When share prices fluctuate, it’s clear to see why diversification is so important. It’s difficult to know which sectors are most sensitive to market anxiety beforehand. When your portfolio is well-diversified, only part of your portfolio will be affected and it’s unlikely that you’ll lose all your savings. Our best advice is to diversify your portfolio across asset classes – both equities and fixed-income investments – and invest in different countries/regions.
From a historical perspective, the stock market has always rebounded – even though it may sometimes take a while. If you want to sell your investments or lower your risks because you’re nervous about strong volatility in the markets, we would generally advise you to sell your holdings in increments and at different times to manage your risks.
7. Can I lower the risk of my investments temporarily?
If you feel uneasy about the fluctuating market, you have probably taken slightly too much risk with your investments. If you want to sell your investments or lower your risks, we would generally advise you to sell your holdings in increments and at different times to diversify your risks. Also when you want to invest, you should buy at different times to spread the risk. It’s important to remember that no one can predict market ups and downs to a tee.
8. If I sell fund units now, will I be able to buy them again later?
There’s no right or wrong answer to when you should sell or buy again but the most important thing to remember is to not let your emotions take over. If you let your emotions guide your decisions, you may end up selling your investments when the panic has set and the prices have already fallen and buying when there’s more optimism and the prices have rebounded. This way you risk always being one step behind the market.
If you want to sell your investments or lower your risks because you’re nervous about strong volatility in the markets, we would generally advise you to sell your holdings in increments and at different times to manage your risks. Also when you want to invest, you should buy at different times to spread the risk.