Since the announcement of the government’s mini-budget in September, there has been widespread disruption and turmoil in the financial markets. As reported in our weekly Stock News Highlights, the markets, foreign investors, and leading financial organisations have responded dramatically to recent Government events.
The fiscal policies introduced by the former Chancellor Kwasi Kwarteng are in sharp contrast with the Bank of England’s monetary tightening policy with an unprecedented impact on the gilt market.
The gilt market is normally a benign investment sector favoured by pension companies for its predictability and low volatility. Some longer dated UK Gilts have seen price movements of almost 10 per cent in a day, behaving more like smaller company equities. It has been a very unusual period in these markets.
This situation has played out against a backdrop of other major issues including the cost-of-living crisis, the war in Ukraine and climate change. We understand how concerning all these cumulative events can feel overwhelming.
While the headlines can appear worrying, here are a few good reasons to stay calm:
Look long term
Events are moving quickly and it can be tempting to react to the latest breaking news. Keep up- to-date with what’s going on but don’t forget the bigger picture. Building wealth takes time and patience.
Understand your situation
Be clear about your financial objectives and goals over time. Monitor the financial landscape – for example, consider whether the current rise in interest rates could offer new investment opportunities.
Be careful of making rushed decisions
Typically, when stock markets are going down there can be a temptation to cash in – it’s an emotional response. Read our blog on behavioural finance to get some more insights.
Get help
If you’re unsure what to do, get some help. Speak to one of our investment advisors or maybe try an independent website such as unbiased. There is lots of useful information on various areas of financial advice and support available.