Keep Investing in the Stock Market in 2018!
After a stellar 2017, there is plenty of talk about stock markets, particularly in the U.S., being overvalued and a correction being imminent. However, a recent piece in Forbes magazine sensibly argues the case for those investing online through an ISA, SIPP or standard stock broking account to keep putting cash into shares.
Firstly, there is no guarantee that stock markets will drop this year. In the UK, the FSTE 100 and wider London-listed market didn’t see the same spectacular gains as peers in the USA, Europe and parts of Asia. So there could still be plenty of room for growth there this year. Also, while tax reform in the U.S.
However, disregarding all of that, the central point
That can be converted into “pound averaging” for the local context but the principle remains the same. The idea is that rather than piling as much money into shares as possible when expecting markets to rise, investing online successfully is better served over the long term by consistently investing smaller amounts of money regardless of what is happening to share prices. In fact, where possible,
Buying some shares constantly and more if possible when the market is down, will lead to an investor achieving a lower average purchase share price over time. And for long term investors this will boost final returns. For UK investors, especially those with SIPPs, taking up as much of the annual allowance as possible every year is also key to the final value of an investment portfolio held with an online stockbroker. Investing in a SIPP results in an automatic 20% boost to cash put in by having income tax refunded and added.
The article also has some advice on what to invest in. ETFs are put forward as the most cost effective way for smaller, retail investors that don’t have a lot of experience or knowledge in picking shares to spread risk effectively.
Please remember that financial investments may rise or fall and past performance does not guarantee future performance in respect of income or capital growth; you may not get back the amount you invested.
There is no obligation to purchase anything but, if you decide to do so, you are strongly advised to consult a professional adviser before making any investment decisions.