DON’T PANIC! WHAT TO DO WHEN MARKETS CRASH

STOCK markets rise, as they did for a while in the UK on Friday. They can also fall – as we witnessed for most of last week in response to a barrage of bad news on the precarious state of the world economy.

Painful for investors with money tied up in pensions, Individual Savings Accounts and share portfolios? Of course, although a share ‘loss’ is technically not a loss until it has been crystallised.

So, are we again heading for financial Armageddon? Maybe, although no one knows. After all, did anyone other than a few isolated (and quiet) sages actually see 2008 coming? Is there anything you as investors should do in response to the events of last week?

You could run for the proverbial hills although that makes little sense if your objective is to build long-term wealth.

You are not going to get there by putting money in a Halifax savings account.

A better strategy is to ensure your investments are diversified across shares, investment funds and investment trusts.And across markets and also assets – bonds for example and maybe property (through a property investment trust).

If you are investing on a regular basis, as most of us do, please do not turn off the tap. Keep contributing because if share prices fall it means your next monthly purchase buys more of them.

Investing requires nerves of steel, especially when all the background noise is negative.

Unless capitalism fails, holding investments long term should ultimately reward.