Seeing the value of your Investment Pot shoot up is exciting. But just as investment values can rise, they can fall too. It’s a natural part of investing. In fact, some savvy investors see dips in value as a chance to invest even more, while prices are down.
It can feel unsettling when you see this happen the first few times, especially when you’ve never experienced it before. It’s not something you’ve seen happen with your savings. But the investment funds we offer are built with these ups and down in mind.
And if you can stay focused on your goals, rather than the bumps along the way, you’ll feel calmer in the long run.
Dips can happen for all sorts of reasons
News stories, politics, sometimes even the time of year. Investment values can go up and down because of all of these things – and lots more.
It’s likely that these things will have a short-term (and potentially big) impact on your investment value – and sometimes it won’t be obvious why that’s happened. But it doesn’t mean they’ll always affect how your investments do overall.
Like the news cycle itself, something that makes headlines today might not have the same impact in a decade’s time. In the same way, a big blip in your investment value now probably won’t affect how it does over 10 years or so.
You’re in it for the long run
When you start investing, you may have an idea of what you’re planning to do with that money. So you know roughly how long you’re planning to keep your money invested. When these dips inevitably come along, keep those future timings in mind.
If you’re planning to stay invested for 5+ years, try to look past little dips here and there. It can be tempting to pull your money out when these downturns happen. And there’s always a chance your investment value could go down even more. But equally, it could come back stronger – we’ve seen that happen before.
But no one can predict when the ups and downs will come. So rather than trying to time the market and choose the ‘perfect’ time to invest, it may be better to concentrate on time in the market – in other words, staying invested for long periods.
That way, there’s plenty of time for your money to bounce back from dips before you need it.
The experts have thought this through
Knowing that world-class experts are taking care of your investments might help you relax a little.
BlackRock – your fund manager and one of the world’s largest fund managers – aims to help grow your money over at least 5 years. And they’ve used research, data and plenty of expertise to factor in these dips.
So your funds are designed with short-term ups and downs in value in mind. It’s known as volatility, and each fund we offer is designed to have a certain level of volatility. The riskier a fund is, the more volatile it’s likely to be.
Your money’s in lots of different places for a reason
When you invest with us, you choose a fund to invest in. That fund invests in multiple other funds, which then invest in lots of different things.
Although your investment value can drop when certain things aren’t doing well, other things might be doing better. This balance and variety can help your fund withstand unexpected dips in one market, and help you grow your investment over the long term.
Remember the risk you picked
When you invest with us, you choose a fund based on how much risk you’re happy to take.
If you’ve gone for a fund that carries more risk, you’re likely to see quite a few dips (big and small) along the way. It’s what you can expect from a fund like this. So try to keep your cool when it happens.
Checking in less will help you more
It can be hard not to keep peeking at your Investment Pot at every opportunity, especially when you see the value going down. But there’s simply no reason to check in every day if you’re planning to invest for the long term.
Looking at your investment too often and seeing the value drop a few times will probably worry you more. And focusing on the short-term ups and downs may make you more likely to take action, and distract you from your long-term goals.
Try to remember that you don’t need that money until way into the future. So until then, it has lots of time to grow. It may not go up in value all the time. But until you need it, there’s no reason to monitor every blip.
The value of your investments could go up or down and you could get back less than you put in.
This isn’t financial advice. If you’d like some, it’s best to speak to a financial adviser.
iShares® and BlackRock® are trademarks of BlackRock, used under licence. BlackRock has no obligation or liability in connection with any product or service offered by Monzo.
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