VICTORIA BISCHOFF: Keep calm and take stock

Calling all savers: step away from your investment accounts. I repeat: put down your tablet or smartphone and back away slowly with your hands in the air.

What a week! After months of doom and gloom, there is light at the end of the tunnel at last.

With markets already riding high after Joe Biden’s U.S. election victory, news of a promising coronavirus vaccine sent share prices rocketing on Monday.

High risk: Only a very small minority of expert traders should even be considering rushing to buy and sell stock right now

Billions were added to the value of Britain’s biggest firms, including those who have suffered this year, such as British Airways owner IAG, Rolls-Royce and Cineworld.

Meanwhile, gold — which has proven a haven recently — and shares in ‘stay-at-home’ stocks such as Zoom and Ocado fell.

Investors caused most major platform providers to crash, with Hargreaves Lansdown reporting its busiest day ever.

Yet only a tiny minority of expert traders should even be considering rushing to buy and sell stock.

Just as savers were urged not to panic-sell investments when the market plunged earlier this year — the same rules apply now. Ordinary investors must avoid making rash decisions.

So much is still unknown. The vaccine looks promising, but there are no guarantees, and the economic impact of the past year is still being felt around the globe.

Just yesterday, it emerged that the UK’s unemployment rate jumped to 4.8 per cent in the three months to September, while redundancies rose to a record high of 314,000.

The world can’t return to normal overnight — it’s likely the markets will be volatile in the weeks ahead. But as seasoned savers know, this is all part of the ups and downs of long-term investing.

The best way to smooth out these peaks and troughs is to drip feed your money into the market. 

This means that when share prices rise, the value of your stocks will follow, and when they go down your next contribution will buy more — plus you stand to make a higher return when they next swing up.

You may well decide you also want to take a punt on a company or industry you feel is currently unloved or undervalued. 

But this shouldn’t just be a knee-jerk reaction to Monday’s news. With share prices changing so quickly, you can’t know what price you will receive by the time your platform has processed your request.

This could also be a good chance for those who’ve spent the past year not wanting to even look at their hard-hit accounts to check under the bonnet. Make sure you haven’t become too heavily invested in one area, and that your funds are still suitable for you.

We finally have something to feel cheerful about — but that doesn’t mean you should let emotion determine investment decisions.

Investing will never be risk-free, but there are steps you can take to mitigate losses. Not trying to time the market is one of them.

Splash out…

As we report today, there is nothing like a bit of retail therapy to cheer you up. I treated myself to some Apple AirPods during the first lockdown. At £137, these wireless headphones were pricey — and they’re easy to lose.

But I use them every day so, in terms of cost per use, they’re a steal… and a much better deal than the £30 dress I bought one gloomy weekend that I’ve since worn twice. 

So don’t feel guilty if you want to splash out with some of the savings you’ve made this year. Just be sure you’re not just spending for the sake of it.

…to help out

While we’re on the topic of loosening the purse strings, there is a notice pinned up in a newsagent in south London that reads: ‘Please spend money on other items (grocery, alcohol, tobacco, cigars etc). 

We are offering all the services (PayPoint, Payzone, bus pass and lottery).’ The message could not be clearer: struggling small businesses need our help.

With people shopping more online, or doing just one big shop each week to reduce their risk of being exposed to Covid, many High Street stores are missing out.

While I’m not advocating that anyone buy tobacco, adding one or two extra items to your basket is a great way to show your support.

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source: dailymail.co.uk

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