DONALD Trump’s trade tariff war has sent stock markets around the world into a spin.
The impact of the sweeping tariff announcements last month saw investments fall for millions of people around the world.
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Even though the US president rowed back on the majority of his higher tariffs, markets have not yet rebounded back to where they were a few months ago.
This means many people’s retirement funds will still be down compared to where they were at the start of the year.
When will my investments go back up?
Experts say there is no guarantee as to when investments may bounce back to where they were, but it is likely they will go back up eventually.
US stocks, which are included in a huge number of investments funds around the world, regained some ground this week after sharp declines following the tariff talks.
The S&P 500, which tracks the performance of 500 leading US companies, fell considerably in the week following so-called “liberation day”.
The index fell from 5,670 just before the announcement to 4,982 on April 8.
But since then, it bounced back to stabilise around 5,396 on April 15.
The FTSE index, which tracks stocks in the UK, also bounced back after Mr Trump decided to spare smartphones and electronics from his tariffs earlier this week.
So, just sitting tight for a while longer could see markets slowly regain some more ground if there are no more drastic announcements.
Sarah Coles, head of personal finance at Hargreaves Lansdown, said: “The pause in the tariffs process has brought more calm to the markets, but once that ends, there’s no real certainty over what will happen.
“This is unlikely to be the end of the volatility.
“However, even if it rumbles on, it’s important to bear in mind that markets go through tough times, and they do recover.”
What should I do if I’m worried?
What you should do now and whether you should worry depends on your circumstances, such as how close you are to retirement.
Generally, if you invest your money in the stock market, it should be for the long-term.
How to start investing
BEFORE investing you need to be aware of the risks, as unlike cash, what you save can go both up and down.
This means you can be left with less than what you started with.
And if your investment performs poorly, you’re not protected for any loss by the Financial Services Compensation Scheme (FSCS) which covers cash up to £85,000 per financial institution.
Although if the firm you’ve invested with is regulated in the UK, you may still be able to use the FSCS to claim if the company itself fails.
There are of course ways to reduce the risk of investing – for example you could opt to invest in cheaper so-called “passive funds” that track the fortunes of various stock markets, such as the FTSE100 or FTSE All Share indices.
Investing in actively managed funds – that pool different types of investment together – is also less risky than just investing in individual companies, known as shares. This is because you’re spreading your risk across a range of companies or other types of investment, such as bonds or property.
Robo-investing – where a computer determines what you should invest in based on a questionnaire of your preferences – also comes with lower risk as it’s spreading your investments.
If you feel confident, you can start investing by setting up an account on an investment platform – a sort of supermarket of different investment products. And you can do all of this within a Stocks and Shares or Lifetime Isa wrapper. Do check the fees first – both for the platform and the individual investments themselves.
If you’re unsure, you should always seek professional advice – you can use comparison services Unbiased or VouchedFor to find a suitable financial adviser.
Stock markets are volatile and prone to rising and falling in line with geopolitical events, but historically, investments have always risen in the long run.
So, experts say that for the most part, the best thing to do is to sit tight and wait for markets to stabilise.
This is because you haven’t actually lost any money until you pull it out of your investments.
As long as your money is invested, it has the potential to go back up, but by taking it out, you are sealing the deal on any losses.
Ms Coles explained: “Most people shouldn’t change their long-term strategy. The risk at times like this is that people feel the need to act.
“The ‘fight or flight’ instinct is hard to beat. It means they might be tempted to sell investments because they’re worried about them falling further.
“However, in reality all this achieves is cementing your losses and removing the opportunity to take advantage of the recovery.
“Investment is a long-term commitment of 5-10 years or more, and with a longer time horizon, there’s the opportunity for markets to recover and go onto significant growth.”
However, if you are closer to retirement or need to cash in your investments in the near future, there are things to consider.
First, even if some of your investments seem to have fallen, your overall pot may not have gone down as much as you think.
This is because many people are invested in “default funds”, which are spread across a wide range of assets which are designed to protect against market shocks.
“If you are coming up to retirement, these funds tend to move you gradually into less risky assets too (known as lifestyling), so it’s worth checking where you stand,” explained Helena Morrissey, head of retirement analysis at Hargreaves Lansdown.
Second, consider whether you really need to withdraw as much as you expected right now.
For example, even if you do need to take money from your pension, consider taking as little as possible and only spending what you need, putting off any larger withdrawals.
Ms Morrissey said: “Coming up to retirement doesn’t necessarily mean this is the moment when you need every penny of your pension.
“If you’re buying an annuity with all of your pot, then it does – but at the moment you’re also getting annuity rates that are better than they have been for a significant period, so that will help offset market movements.”
An annuity is where you spend some of your pension on buying a product that then pays out a guaranteed income for the rest of your life.
“If you’re in this position, it’s worth doing the maths and considering your options,” Ms Morrissey added.
“You might, for example, have other savings you could draw on for a period until markets have recovered.
“Alternatively, you might decide to phase retirement, perhaps buying an annuity with part of the pot and taking on part-time work for a period to close the gap.
“You can then consider annuitising the rest of your pot later in retirement.”
The key, experts warn, is not to make any knee-jerk reactions that you come to regret.
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