20th July 2016


On occasion we are asked whether it is worthwhile coming out of the stock market and encashing investments whilst the stock market is at a high, to then re- invest once markets have fallen. This can be a ‘dangerous’ game.

Market timers often try to predict big wins in the investment markets, only to be disappointed by the reality of unexpected turns in performance. For those who do not wish to subject their money to such a potentially risky strategy, time- not timing -could be the best alternative.

Market timing is a strategy in which the investor tries to identify the best times to be in the market and when to get out.

Advocates of market timing say that successful forecasting can result in higher returns than other strategies. The difficulty is reliably predicting the unpredictable.

Although some professionals may be able to use market timings to reap rewards, one of the biggest risks of this ‘strategy’ is potentially missing the market’s best-performing cycles. That is why perhaps the best move for most individual investors- especially those striving toward long-term goals- might be to invest and hold on to these investments throughout market cycles. This is commonly known as a ‘buy-and-hold’ strategy.

Buy and hold, however, doesn’t mean ignoring your investments. Remember to give your portfolio regular checkups, as your investment needs will change over time. Annual reviews may be enough to help ensure that the investments you select will keep you on track toward meeting your goals.

Most experts agree that generally, a portfolio made up primarily of the ‘riskier’ funds may be best for those saving for goals more than five years away. On the other side those saving for shorter-term goals, might consider a portfolio weighted toward money market instruments.

Remember, though, even those enjoying retirement should consider the potential inflation-beating benefits as well as the risks of stock market related involvements.

As always please contact the team here at Platinum if you would like to discuss your portfolio, and review whether it is best structured to achieve growth in line with your timescales.