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A
loss is not a loss until you’ve taken it!
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In
a bear market, it can be tempting
to take your money out quickly. But this is often the
worst thing you can do and it will usually only result
in losses. Unless you really need to have access to
your funds, it’s worth remembering that a loss
is not actually a loss until you’ve taken it.
Keeping your investments on the right track
* Historically, falls in share prices, even
significant ones, caused by stock market corrections
generally even out over time. For example, the FTSE
All-Share Index was back to the level it had reached
before the crash of October 1987 within two years and
had more than doubled its pre-crash value within ten
years. (Source: London Stock Exchange 2003)
* Well-researched investment decisions should withstand
a bear market (a falling market) as well as a bull market
(a rising market). Share prices fall due to lack of
confidence in the market and not generally because of
problems with a particular company. And if you have
invested in an ISA, for example, it is likely that the
investment manager will have access to a spread of investments.
* Losses on paper do not become real until you sell
your investments, so it’s best not to sell investments
when markets are low. If you can hang on, past experience
shows that the market is likely to recover and you should
be able to sell your investments at a better price some
time in the future.
(article
dated 1/11/03)
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