The problem with investing is that it is quite boring. So boring in fact that the less you think about it the better you do. Playing the peaks and troughs of the market with your long term investments is a sure-fire way to build up a raft of unnecessary fees and charges that could outweigh any potential performance benefit.
If you are considering converting your investment ISA to cash because you think the market is about to crash read our guide to predicting a market crash and what you can do about it. In it we highlight some ways to hedge your portfolio against a market downturn without realising any investments and incurring fees.
The main point to consider here is that the market can go up as well as down so if you have reached a goal it may be worth taking your chips off the table. It’s very easy to protect yourself from losing money in the stock market (by simply not having any money in it), but it can take a long time to make more money. Although if you are prone to FOMO (fear of missing out) you may kick yourself if the market rises. Interest rates for savings accounts are so woefully low at the moment, you won’t see much joy there either.
There will always be a black swan event around the corner that knocks the market, how you handle that is dependent on your risk appetite and who you have advising you. For an interesting anecdote on this read my interview with Steven Sussman, the JM Finn CEO.
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Richard founded the Good Money Guide (previously Good Broker Guide) in 2015 and has been a broker for 20 years most recently at Investors Intelligence and previously a multi-asset derivatives broker at MF Global (Man Financial). Richard started his career working as a private client stockbroker at Walker Crips and Phillip Securities (now King and Shaxson) after interning on the NYMEX oil trading floor in New York and London IPE in 2001 & 2000.