{"componentChunkName":"component---src-templates-post-js","path":"/3-ways-to-help-your-customers-get-the-best-of-investing-in-the-current-market/","result":{"data":{"ghostPost":{"id":"Ghost__Post__63203dfb755d45003dd44440","title":"3 ways to help your customers get the best of investing in the current market","slug":"3-ways-to-help-your-customers-get-the-best-of-investing-in-the-current-market","featured":false,"feature_image":"https://images.unsplash.com/photo-1638481826540-7710b13f7d53?crop=entropy&cs=tinysrgb&fit=max&fm=jpg&ixid=MnwxMTc3M3wwfDF8c2VhcmNofDI2fHxpbnZlc3Rpbmd8ZW58MHx8fHwxNjYzMDU4MTYw&ixlib=rb-1.2.1&q=80&w=2000","excerpt":"Could now be the right time for your customers' to invest? ","custom_excerpt":"Could now be the right time for your customers' to invest? ","created_at_pretty":"13 September, 2022","published_at_pretty":"13 September, 2022","updated_at_pretty":"13 September, 2022","created_at":"2022-09-13T08:23:23.000+00:00","published_at":"2022-09-13T12:32:30.000+00:00","updated_at":"2022-09-13T12:56:54.000+00:00","meta_title":null,"meta_description":null,"og_description":null,"og_image":null,"og_title":null,"twitter_description":null,"twitter_image":null,"twitter_title":null,"authors":[{"name":"Peter Fairweather","slug":"peter","bio":null,"profile_image":null,"twitter":null,"facebook":null,"website":null}],"primary_author":{"name":"Peter Fairweather","slug":"peter","bio":null,"profile_image":null,"twitter":null,"facebook":null,"website":null},"primary_tag":null,"tags":[{"name":"#blog","slug":"hash-blog","description":null,"feature_image":null,"meta_description":null,"meta_title":null,"visibility":"internal"}],"plaintext":"It’s been a long time since there’s been this much uncertainty in so many areas.\nIn the past few months alone we’ve seen:\n\n * Many loan repayments getting more expensive due to rising interest rates\n * Energy prices going up at a rate that means many are struggling to meet other\n basic costs\n * Food prices increasing significantly\n * Many investments bouncing around in value like a yo-yo\n\nAgainst this backdrop you might be finding clients asking whether saving and\ninvesting is a smart move right now, given all the aforementioned volatility. At\nMultiply we always take the view that the following core areas should be taken\ncare of first before investing:\n\n * Budgeting\n * Building an emergency fund\n * Protecting any loved ones\n\nBut say your customers have budgeted properly, got an emergency fund in place\nand protected themselves and their family - could now be the right time for them\nto invest? \n\nHere’s our take on advising those customers asking this difficult question.\n\nFirst things first, gauge their attitude and ability\n\nPhoto by LinkedIn Sales Solutions\n[https://unsplash.com/@linkedinsalesnavigator?utm_source=ghost&utm_medium=referral&utm_campaign=api-credit] \n/ Unsplash\n[https://unsplash.com/?utm_source=ghost&utm_medium=referral&utm_campaign=api-credit]\nYour customers need to know themselves before entering into such an\nunpredictable market. A key part of that process is understanding:\n\n * Their attitude to risk\n * Their ability to take risks and manage losses\n\nAttitude and ability are two very different factors. Someone may have an\nattitude where they might want to take lots of risks, but financially they can’t\nafford to. On the reverse, they may not like taking risks but could have\naccessible money they don’t need and could in a worst case scenario afford to\nlose.\n\nInvestors should understand both so they can strike the right balance between\nthe two. We stress to prospective investors that even if they can afford to risk\nthe money, they shouldn’t do it if they have a low attitude to risk and/or it\nwould keep them up at night.\n\nSecondly, get them to understand that the good times don’t last forever\n\nPhoto by Jamie Street\n[https://unsplash.com/@jamie452?utm_source=ghost&utm_medium=referral&utm_campaign=api-credit] \n/ Unsplash\n[https://unsplash.com/?utm_source=ghost&utm_medium=referral&utm_campaign=api-credit]\nProspective investors also need to consider the bad times as well as the good.\nAt the current time we’re finding some investors (who hadn’t taken advice!)\nencountering the following problems:\n\n * They had previously invested, but are now finding out they don’t have the\n ability to suffer losses; If only they had built an emergency fund!\n * Others have mis-calculated their attitude towards risk and are now seeing\n losses that they had not expected or thought were possible \n\nCurrently, we meet many worried investors who ask “Should I change anything?”.\nWell the answer is ‘Maybe’, but it wouldn’t be because of the current investment\nclimate. It would be more about whether any existing investments are suitable\nfor them. \n\nIf their existing investments are not aligned with their risk profile, then\nmaybe they should be considering a change, but otherwise we revert to\nrecommending that they hang in there.\n\nInvesting can be very emotional and at times like these, the volatility can be a\nreal test of both attitude and ability to manage fluctuations. For some, they\nfind that they just cannot abide being invested in something that fluctuates in\nvalue. So how can you assess their attitude and ability to take risks?\n\nThirdly, think about applying a more sophisticated risk tolerance tool\n\nPhoto by John Schnobrich\n[https://unsplash.com/@johnschno?utm_source=ghost&utm_medium=referral&utm_campaign=api-credit] \n/ Unsplash\n[https://unsplash.com/?utm_source=ghost&utm_medium=referral&utm_campaign=api-credit]\nPre 2000, risk within financial advice was as simple as asking if you had a\n‘low’, ‘medium’ or ‘high’ attitude and rarely was any thought given to emotions\nor someone's ability to suffer losses. Today, there are numerous psychometric\ntools available, most of which can help a potential or existing investor pin\ndown their attitude to risk and a few also consider the person’s ability to deal\nwith losses.\n\nA good risk tool will ask a number of questions (usually at least 10), have\ndetailed descriptions of the risk profiles and also show the likely extremes of\nvolatility that you might see. We would encourage people to pay attention to the\ndownward volatility figures because these are a better test of their emotions in\nthe event of losses.\n\nSo whether we are serving someone new to investing or someone with existing\ninvestments, by using a risk profiling tool, we should be able to establish\ntheir current risk profile, which should in turn indicate the type of\ninvestments they should be holding.\n\nConclusion \n\nIn summary, our core message to investors, whether new or seasoned, is that\ninvesting is a long-term game and investors need to understand themselves first\nto make sure that any investments held match them. \n\nIf they do, all is good and we believe investors shouldn’t be changing\ninvestments based on short-term market circumstances. Instead, they should take\nthe long-term view, which is that ‘over time the ups will outweigh the downs’. \n\nThat being said, if an investment portfolio is unsuitable, they really should be\ntaking advice on the most suitable action to be taken.\n\nVolatility will always be a major factor and when it drags an investment\nportfolio down in value, investors need to be able to ride it out. Obviously,\nthere are times when they will want or need to make changes, but selling when\nvalues are low is generally not advised.\n\nIf there is a positive to be taken about the current climate, then if someone\ndoes have cash available which they can afford to invest, buying in whilst\nmarkets are low can be better. Buy low, sell high is a very simple mantra to\ninvest by and is the reason why such investments are for the longer term.","html":"

It’s been a long time since there’s been this much uncertainty in so many areas. In the past few months alone we’ve seen:

Against this backdrop you might be finding clients asking whether saving and investing is a smart move right now, given all the aforementioned volatility. At Multiply we always take the view that the following core areas should be taken care of first before investing:

But say your customers have budgeted properly, got an emergency fund in place and protected themselves and their family - could now be the right time for them to invest?

Here’s our take on advising those customers asking this difficult question.

First things first, gauge their attitude and ability

\"Two
Photo by LinkedIn Sales Solutions / Unsplash

Your customers need to know themselves before entering into such an unpredictable market. A key part of that process is understanding:

Attitude and ability are two very different factors. Someone may have an attitude where they might want to take lots of risks, but financially they can’t afford to. On the reverse, they may not like taking risks but could have accessible money they don’t need and could in a worst case scenario afford to lose.

Investors should understand both so they can strike the right balance between the two. We stress to prospective investors that even if they can afford to risk the money, they shouldn’t do it if they have a low attitude to risk and/or it would keep them up at night.

Secondly, get them to understand that the good times don’t last forever

Photo by Jamie Street / Unsplash

Prospective investors also need to consider the bad times as well as the good. At the current time we’re finding some investors (who hadn’t taken advice!) encountering the following problems:

Currently, we meet many worried investors who ask “Should I change anything?”. Well the answer is ‘Maybe’, but it wouldn’t be because of the current investment climate. It would be more about whether any existing investments are suitable for them.

If their existing investments are not aligned with their risk profile, then maybe they should be considering a change, but otherwise we revert to recommending that they hang in there.

Investing can be very emotional and at times like these, the volatility can be a real test of both attitude and ability to manage fluctuations. For some, they find that they just cannot abide being invested in something that fluctuates in value. So how can you assess their attitude and ability to take risks?

Thirdly, think about applying a more sophisticated risk tolerance tool

\"what’s
Photo by John Schnobrich / Unsplash

Pre 2000, risk within financial advice was as simple as asking if you had a ‘low’, ‘medium’ or ‘high’ attitude and rarely was any thought given to emotions or someone's ability to suffer losses. Today, there are numerous psychometric tools available, most of which can help a potential or existing investor pin down their attitude to risk and a few also consider the person’s ability to deal with losses.  

A good risk tool will ask a number of questions (usually at least 10), have detailed descriptions of the risk profiles and also show the likely extremes of volatility that you might see. We would encourage people to pay attention to the downward volatility figures because these are a better test of their emotions in the event of losses.

So whether we are serving someone new to investing or someone with existing investments, by using a risk profiling tool, we should be able to establish their current risk profile, which should in turn indicate the type of investments they should be holding.

Conclusion

In summary, our core message to investors, whether new or seasoned, is that investing is a long-term game and investors need to understand themselves first to make sure that any investments held match them.

If they do, all is good and we believe investors shouldn’t be changing investments based on short-term market circumstances. Instead, they should take the long-term view, which is that ‘over time the ups will outweigh the downs’.

That being said, if an investment portfolio is unsuitable, they really should be taking advice on the most suitable action to be taken.

Volatility will always be a major factor and when it drags an investment portfolio down in value, investors need to be able to ride it out. Obviously, there are times when they will want or need to make changes, but selling when values are low is generally not advised.

If there is a positive to be taken about the current climate, then if someone does have cash available which they can afford to invest, buying in whilst markets are low can be better. Buy low, sell high is a very simple mantra to invest by and is the reason why such investments are for the longer term.

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