The stock market has been rocky lately, and that volatility can be concerning to investors. Coupled with the economic uncertainty we’re facing right now (including surging inflation and potential interest rate hikes this year), some investors worry a crash is looming. To be clear, it’s impossible to say for sure whether a market crash is coming or not, as even the experts can’t predict exactly how the market will perform in the short term. While nobody knows for sure what’s in store for the stock market, there are a couple of reasons you shouldn’t worry about a potential crash. The most important thing to remember during times like these, though, is that the market as a whole has a very long history of recovering from downturns. In fact, since 1928, the S&P 500 has fallen by more than 20% on 21 separate occasions. And every time, it eventually bounced back. In theory, the best investing strategy would be to pull your money out of the market right before prices fall, then reinvest when they’re at rock bottom. This is called timing the market, and it’s a strategy some short-term investors use to make a quick profit. However, this tactic is nearly impossible to pull off successfully. Because the market is unpredictable, no one can say exactly when it will crash or when prices will bottom out. In many cases, the market will dip only to rebound a day or two later. If you sell and prices quickly recover, you’ll miss out on those potential gains. Similarly, if you wait too long to sell and prices have already fallen substantially, you may end up selling at a loss. A safer bet, then, is to simply hold your investments regardless of what the market is doing. If prices drop, try your best to wait it out until they eventually recover.

Past performance is not a reliable guide to the future. The value of investments and the income from them can go down as well as up. The value of tax reliefs depend upon individual circumstances and tax rules may change. The FCA does not regulate tax advice. This newsletter is provided strictly for general consideration only and is based on our understanding of law and HM Revenue & Customs practice as of February 2022 and the contents of the Finance Bill. No action must be taken or refrained from based on its contents alone. Accordingly, no responsibility can be assumed for any loss occasioned in connection with the content hereof and any such action or inaction. Professional advice is necessary for every case.