What to ask yourself before trading in a volatile market

Now, more than ever, given the current times, it’s really important to research all your investment options. See our top 6 questions to ask yourself before making any investment decisions.

Please remember that the value of investments and the income from them can fall as well as rise, and you may get back less than you invest. If you’re not sure about investing, seek financial advice.

1. Do I need to take action now?

Try not to be reactive or rush into any investment decision. Fallen stock values and alarming news headlines could make you feel nervous, but it’s important to take your time. Think through any financial decisions before you act on them.

Many investments have fallen in price recently but selling them off now could mean missing out on any increases in the future if markets recover.

2. What are my other options?

Do you need to make cash available now? If you do, make sure you look into all your options. Are there any other alternatives you could access? You may want to use any savings in the short-term (but keep some savings set aside if possible). Could you access any of the government support measures that have been put in place?

If you decide to cash in your investment, try to cash in only the minimum you need. If you’re thinking about cashing in a larger investment, seek advice from a financial expert before going ahead.

3. What risks should I consider when thinking about current opportunities?

Making a new investment at a time when prices are low may be something you’re thinking about. Before you go ahead, make sure you have the level of risk in your portfolio that you’re comfortable with, this may mean having a broad range of assets in your portfolio.

It’s especially important if you have more money invested in one particular asset or sector, as this may leave your portfolio to be impacted more by any falls in price of your investments. Remember when choosing investments that past performance is not a reliable indicator of future performance.

Our Boost Your Skills articles have plenty of useful further reading on blending your assets and risk management.

4. Could I change my regular contributions?

Now is a good time to review and make any adjustments to any regular investment contributions.

You may be comfortable with the risk level of the investments you have and look to continue these contributions.

You may also choose to reduce or stop your regular contributions while you research any changes you wish to make in the future. Before making any investment decisions, you may wish to get independent financial advice.

5. Will investment decisions I make impact my tax relief?

It is important to understand the tax relief aspects of your investments. For example, by investing in pensions you have an added uplift in tax relief from the government on your contributions.

ISAs don’t benefit from the same government uplift but holding your investments in an ISA makes your investment tax efficient. Any potential profit you make is free from UK tax.

Remember that tax treatment is dependent on your personal circumstances and may change in the future.

6. Am I making the most of my research tools?

You can use our practical tools to monitor your investments and the current market situation. They can help you feel more in control of how your investments are performing.

Don’t forget you can visit Market News on our website and read the latest independent market analysis for free.

Our Research Centre also has all the information you need on the performance and latest prices of your investments. When researching your investments, remember that past performance is not a reliable indicator of future performance.

Remember: if you’re in any financial difficulty MoneyHelper can offer free and impartial advice. You can contact them via their website at www.moneyhelper.org.uk.

You can also find advice specific to Covid-19 on our Coronavirus help page.

Keep your account secure: there has been a rise in attempts by scammers to acquire customer information following the outbreak of Covid-19. We will never contact you asking for your personal details. And we will always use your name and title in our emails to you, as well as proof of your account number or postcode. Find out how to protect yourself from fraud.

Halifax Share Dealing Limited. Registered in England and Wales no. 3195646. Registered Office: Trinity Road, Halifax, West Yorkshire, HX1 2RG. Authorised and regulated by the Financial Conduct Authority under registration number 183332. A Member of the London Stock Exchange and an HM Revenue & Customs Approved ISA Manager.

Eligible investments with us are protected by the Financial Services Compensation Scheme (FSCS). For further information about the compensation provided by the FSCS, refer to the FSCS website at www.fscs.org.uk/. You can also visit our Financial Services Compensation Scheme page for more details.