We thought it might be timely to review the past ten calendar years and remind ourselves about how different assets perform year by year. The ups and downs of each sector have been driven by events that occurred in each year. This will be no different for 2022.
The chart below shows that at present fixed interest bonds are having a hard time. There they are on the ocean floor in 2021 and this is because of their inverse relationship with interest rates. When these go up bond funds suffer because the promissory worth of the bonds (reflecting previously low interest rates,) is now worth less.
Meanwhile, look at the ups and downs in the ranking of other different investment classes over the previous decade. Some types of investment are really volatile. Emerging markets shares have mostly bounced from being at the very top to the very bottom. The best investor strategy is simple: diversification.
Our message in times when markets drop is to hold on.
Clients that have been with us know the story. New investors will find it unsettling to see their portfolios drop in value, but you will only crystallise a loss if you sell out. We encourage you to talk to your adviser if you have concerns.
The ups and downs of each investment sector have been driven by events that occurred in each year. This will be no different in the future.
The best investor strategy is simple: diversification.