A question one of our analysts was asked at a recent networking event ‘Will Brexit make my share portfolio plummet? It better not as I am looking to retire in less than 10 years!’
The answer to the question can be a long winded one but the answer is simple; yes it can, but not if you invest and trade the markets after doing proper, thorough research.
Talk about stating the obvious, is what you’re probably thinking now. However, people who would be deemed as experienced investors lost an awful lot of money on the night of the Brexit through the horrendous feeling known as panic.
Upon the markets opening the morning of the Brexit result, the markets fell through the floor and a lot of the big players in the FTSE 100 dropped, and dropped…and dropped. Some opened up over 25% down-drops unseen before. What caused this? People panicking and putting in orders to sell their shares on opening, and when the shares opened up down investors continued selling.
What has happened since? The FTSE 100 index has hit record levels and share prices are bouncing back.
So what can be learnt from this? Whatever happens-Don’t panic!. Pound cost averaging is a trading method that is very popular with our team at InvestmentWatch UK. It works by investing similar amounts regularly so it smooths out the risk of a market downturn, therefore the drop in the market can be a great time to top up your current share portfolio ready for the upturn!
Whilst this is not an exact science, thorough research and a good understanding of the market will help boost your portfolio performance and minimise risk.