Markets tremble over Russian fears – here’s what investors should do
“Reduce losses and take steps to diversify. Only investment funds that can afford to be lost should be invested in more speculative investments,” Hobbs said.
Myron Jobson of fund store Interactive Investor echoed this. He said the trickle-down injection of money into the stock market was the most effective way to stay calm and reduce risk.
“By investing the same amount regularly, you are also buying fewer stocks when they are expensive and more when they are cheap to provide a smoothed return,” he said.
Think “capital preservation”
Savers worried about an upcoming crash can take refuge in funds designed to make money when markets fall.
Investment manager Ruffer’s flagship investment trust – the Ruffer Investment Company – aims to grow by at least twice the Bank of England’s official interest rate – but has made many more investors than that and has grossed 68% over the past decade.
He holds many inflation-linked bonds and currencies such as the Swiss franc and Japanese yen, which are seen by investors as safe havens. In the last 12 months, when investors started to worry about inflation, it gained 14%.
Wealth manager Brewin Dolphin’s Rob Burgeman said it wouldn’t do as well as stock markets when they were rising, but offered a lot of stability when markets were falling and was therefore a worthy inclusion in a portfolio.
Mr Burgeman also tipped the £950million Capital Gearing Trust, managed by Peter Spiller, an investor whose record dates back to 1982. Its aim is to preserve and grow shareholder wealth over time after taking inflation into account.
It does this by buying inflation-linked bonds, tracker funds and some individual stocks, but its main strategy is to buy investment trusts that trade at steep discounts to the value of their assets. This approach has earned investors 9% a year since 2001, well ahead of UK equities and the rate of inflation.