Oct 15, 2020 | BEN WAITE

Ear plugs at the ready

Have you ever found yourself trying to fall asleep next to a snorer? There’s something about the continuous noise that makes dropping off feel almost impossible.

Pop in some ear plugs, welcome the silence and the land of nod is yours for the taking.

It’s not dissimilar to the noise around stock markets in the media – continuous, loud and annoying enough to keep you up at night. Ear plugs might not do the trick here so, let’s look at what will:

1. Your behaviour is the best defence. Investing in markets is a very noisy business and the more you expose yourself to that noise the harder it is to ignore. Papers, websites, newsletters, tv coverage – it can be hard to escape the headlines. Why not try shifting your behaviour to avoid the constant stream where possible!

2. Noise doesn’t equal success. At the end of the day we’re all human – it can be hard not to follow the crowd or jump on the next trend. We know you can’t block out all media, so remember just because there is a lot of noise about a certain stock or market movement doesn’t mean it’s the route to success. 

3. Remember your objectives are the only ones that matter. Your individual reason for having an investment portfolio is different to everyone else’s. The path you’re on to reach financial freedom is unique to you and your loved ones. Don’t let someone who doesn’t know your situation dictate what you should do with your money or keep you up at night questioning your decisions.

The chart below illustrates the monthly returns every year, from January 1970 to August 2020 – each dot represents a month within that year. As you can see, things change all the time, not just yearly but monthly and even daily!

Data source: Morningstar

Market movements aside, between 1970 and 2010 developed equity markets have delivered a return of 10.9% on an annualised basis before inflation and 6.5% after inflation (but before costs). It’s exactly why a long-term approach is the way forward.

Let your choices and actions be your ear plugs to block out incessant media noise.

If you’re finding it hard to differentiate fact from fiction when it comes to the headlines get in touch and let us help.

 

Past performance can’t guarantee what investments will do in the future. The value of a portfolio can go down as well as up, so there’s a chance you’d get back less than you put in.

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