The importance of Volatility

With cash deposit interest rates being so low the effect of inflation is not just eroding your capital values it is destroying it. The only way that people can enjoy capital growth is to invest in equity type investments with a good diversification of assets. So what prevents more people from doing this, well put quite simply ignorance and fear, ignorance of the true effect of capital erosion and the proper behavioural policy to adopt when investing into equities coupled to the fear of volatility. Well let me assure you of something markets go up and markets go down, but they bounce as history has proven time and time again and this is in effect volatility, volatility is not your investment enemy it is your friend because without it there would be no opportunity for growth, a good fund Manager identifies medium to long term opportunities and buys when the markets are down and sells when they are up, this is known as buying low and selling high or pound cost averaging.
Inexperienced investors do the opposite they buy high and sell low, it may sound perverse but the best time to get into the Markets is when they are low not high, any fool can make money in a rising market.
For an introduction to efficient investing and an introduction to investment behaviour and an understanding of risk and capacity for loss please contact me using our contact form or using my contact details below for a no obligation initial meeting.

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Please note when reading any information on this website: past performance is no guide to future performance. The value of an investment may go down as well as up and an investor may not get back the full amount invested. Before investing, please ensure that you have read the information set out in the simplified prospectus, which includes full details of the charges. Any material available is directed only at persons in the UK and is not an offer or invitation to buy or sell securities. Opinions expressed on this website represent the views of Stephen Baker Financial Consultants Ltd at the time of publication, are subject to change, and should not be interpreted as investment advice.

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