After European stocks tumbled to a level not seen since after the financial crisis in mid-2009 on Thursday, analysts and investors went into panic while people with money invested are beginning to stress about what to do with it all.
We have been anticipating volatile investment conditions with muted returns. We have recently moved further underweight equities on the back of recent concerns as to the global recovery and the state of the world economy. In these uncertain times, you are best served in a balanced fund holding a diversified range of assets with an asset manager carefully watching and protecting your assets full time.
It is very easy to panic in these market conditions and let emotion take control of your investment decisions. Having an investment professional making these calls for you is most important. Cancelling your long term savings plans just after large falls in the market is a costly mistake often made as the market tends to over react to bad news and then there is a temporary recovery shortly thereafter.
Reasons for making changes should be as a consequence of changes to your personal circumstances and not knee jerk reactions to the market. It is important to recognise that the market in the short term is volatile, but sticking to the appropriate strategy, allowing your investment manager the freedom to make the most of these short term opportunities, will reap rewards over the long term.
Rowan Burger is head of investment strategy at Liberty.
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