Top investment tips for 2012

IF ONE word could be used to sum up stock markets during 2011 it would surely be ‘volatile’.

Market turmoil has certainly taken its toll on investor confidence, leaving many people hesitant to invest anything in stocks and shares.

So what does 2012 hold? Even the best fund managers often fail to accurately predict the future, but most agree that 2012 is going to continue to be a tough ride for investors.

Here, cashy gives some top tips for investors for the coming year…

Keep it in perspective

Market volatility is nothing new, yet time and again investors fail to keep crisis events in perspective.

As unsettling as dips can be, long-term history has shown that while stock markets often react strongly to major events, they have often resumed their upward trend in a very short space of time.

Diversify

There are certain principles to stand by during a crisis period that will help you make investment decisions; diversification is one of them.

Make sure your portfolio is diversified across asset classes to reduce risk and smooth returns.

Be disciplined

It can be difficult to invest with confidence while markets are volatile, but don’t let short-term market movements alter investment decisions. Over the long term, discipline breeds success.

Keeping calm and adopting a consistent and disciplined investment approach could help ride out volatility and give the opportunity to buy quality assets at a more attractive price than they were trading at when markets were higher.

Don’t try to time markets

It is very difficult to predict when is the best time to enter or exit the market; those who try to time this usually miss the bounce. As the saying goes, you’ve got to be in it to win it!

Seek independent advice

Be wary of anyone who tries to tell you they can see into the future: nobody has a crystal ball.

Do take expert advice, though. In times of crisis, no matter how much you think you may know, rely on a professional manager who devotes considerable time sifting through market information and understanding market influence.

Pic credit: Salvatore Vuono/ FreeDigitalPhotos.net

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