Business

It's time to keep calm and stay invested

If you're an investor, putting your phone down is one way to help shut out the noise
If you're an investor, putting your phone down is one way to help shut out the noise If you're an investor, putting your phone down is one way to help shut out the noise

TURN on the TV, pick up a paper, look at the internet, or listen to the radio and it’s easy to feel bombarded by negative news.

Threats of recession, a plummeting pound, Brexit uncertainty, or news of a tumbling stock market can all leave you feeling understandably worried about your investments, which may in turn lead you to make erratic, or hasty investment decisions. This is not ideal if you’re meant to be in it for the long-haul.

Our Barclays Smart Investor team have some tips on how tune out the negative noise and stay focused on your long-term investment goals.

Blocking out the noise is why, for example, Warren Buffett says he has chosen to live continuously in Omaha, Nebraska, as he claims that being far from Wall Street has helped him keep perspective.

The problem is, most of us can’t go off and live in Nebraska to escape the news. But what techniques can you adopt to stop yourself falling down, what one fund manager recently described as, “a rabbit hole of negativity”?

Dr Peter Brooks, head of behavioural finance at Barclays, has three tips to help investors shut out the noise.

1 Keep a record of the reasons you invested - It’s a good idea to jot down the reasons you invested and to revisit these during turbulent times. When a fund manager buys a company, they are duty bound to write an investment note on the reasons it was added to their fund. That way, if things change over time for that company, they have a point of reference as to all the reasons they liked it in the first place. Making a note of your reasons for investing can help cool any temptation to hastily change your plans, and assess whether the reasons for those still hold true.

2 Set yourself goals - To help yourself to focus on the long-term, remember just why it is you are investing. Is your goal to live comfortably in retirement, or to save for your children’s education, or to help them get on the property ladder? By keeping your focus and remembering just why you are investing, you can try and retrain your thinking so that you spend less time worrying about the short-term and instead concentrating on achieving longer-term success.

3 Put your phone down - Of course we all need our phones for important things, like keeping in touch (and playing Candy Crush) but if you’ve got notifications set up to alert you every time something happens to a company or fund you hold, it’s easy to become addicted to continuously monitoring what’s going on.

So how can we resist the temptation to constantly check for updates so that we’re less tempted to make impulse reactions to negative news? One simple win is turning off alert notifications in apps; another great idea from an investor was to only consider investment decisions at the weekend. Since markets are closed you have a chance to sleep on any decision before having the opportunity to do anything.

Shutting out the noise can help prevent you from trying to time your long-term investments. The longer you’re prepared to stay invested, the greater the chance of your investments hopefully yielding positive returns, although of course there are no guarantees; no matter how long you hold investments they can still fall in value and you may get back less than you invested.

Time spent in the market also means you’ll have longer to benefit from compounding. To use a less technical term, think of this as a sort of snowball effect, whereby you earn returns on your returns over the long term.

Given all the noise, this does take willpower, but by sticking to these three tips, the hope is you’ll be rewarded for your patience.

:: Claire McCombe is private banker at Barclays Wealth & Investments NI