Stock market volatility: 6 things to consider when trading in today’s market

Now, more than ever, it’s really important to research your investment options before making any financial decisions. Given the current climate, you may have natural concerns. To help you, we’ve compiled our top 6 things to consider if you hold investments in a volatile market.

1. Do I really need to take action now?

It’s easy to become reactive when fallen stock values and alarming news headlines could make you want to rush into investment decisions. Always take your time and calmly think through any financial decisions before you act on them.

Many investments have fallen in price recently but selling them off now may mean missing out on any potential increases in the future if markets recover.

2. What other options are available to me?

Do you need to make cash available in the short-term? If you do, make sure you consider all your options. Are there any other alternatives you could draw from? Could this be a better solution, rather than realising losses from an investment.

Are there any savings you could access in the short-term? (without impacting having some savings set aside). Could you access any of the government support measures that have been put in place?

If you find that you do need to cash in your investment, it’s worthwhile only cashing in the minimum you need. If you’re thinking about cashing in a larger investment, it might be worth seeking expert advice from a financial advisor before deciding to proceed. There will normally be a charge for that advice.

3. What risks should I consider when thinking about my options?

When markets dip, naturally investors use this as an opportunity to diversify into new investments in the hope of future profits. If you feel this is right for you and you want to proceed, it’s important to ensure you have the right level of risk in your portfolio, one that you are comfortable with.

It’s especially important if you have more money invested in one particular asset or sector. Also remember that past performance is not a reliable indicator of future performance.

Our Boost Your Skills articles have plenty of useful further reading on blending your assets and risk management.

4. Could I start or adjust my regular contributions?

If you make regular investment contributions, now is a good time to consider any adjustments.

If you’re comfortable with the risk level in your portfolio, you may wish to continue contributions as they are.

You may also wish to reduce or stop your regular contributions while you review or update your portfolio. You may want to seek expert financial advice before making any changes.

5. Will any investment decisions affect my tax relief?

It is always good to be aware of all the tax relief available to you. For example, contributions to your pensions can receive an added uplift in tax relief from the government.

ISAs don’t benefit from the same government uplift but holding your investments in an ISA means that any potential profit you make is free from UK tax, making your investment tax efficient.

Remember that tax treatment is dependent on your personal circumstances and may change in the future.

6. Am I making the most of the research tools available?

There are practical tools available to you which you can use to monitor your investments and the current market situation. This can help you feel more in control of how your investments are performing.

Don’t forget you can access Market News and read the latest independent market analysis for free.

Our Research Centre also ensures you have all the information you need on the performance and latest prices of your investments. When researching your investments, remember that past performance is not a reliable indicator of future performance.

Remember: if you’re in any financial difficulty MoneyHelper can offer free and impartial advice. You can contact them via their website at www.moneyhelper.org.uk.

You can also find advice specific to Covid-19 on our Coronavirus help page.

Keep your account secure: there has been a rise in attempts by scammers to acquire customer information following the outbreak of Covid-19. We will never contact you asking for your personal details. And we will always use your name and title in our emails to you, as well as proof of your account number or postcode. Find out how to protect yourself from fraud.