Should I cash in my investments?

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Ask the expert at Smith & Pinching about investment strategies - Credit: Getty Images/iStockphoto

The value of my investment portfolio went down drastically last spring at the start of the pandemic but I held my nerve and didn’t sell out. That’s paid off well and the portfolio is now worth more than it was this time last year. I’m wondering if I should cash in my investments now while the going is good?

Phil Beck is an Independent Financial Adviser Picture: Smith & Pinching

Phil Beck is an Independent Financial Adviser Picture: Smith & Pinching - Credit: Archant

Phil Beck of Smith & Pinching responds:

It’s good to hear that your portfolio has recovered well. In many cases, share prices have returned to at least pre-pandemic levels and there is general optimism in markets that growth may continue.

Having said that, high market values don’t generally mean that you should just cash in what investments you hold. You will, after all, need to put your money somewhere and if you sell high, you may well end up buying replacement investments at high values too and not getting a net gain. Cash investments – bank and building society accounts, for example – are still offering relatively low interest rates that will struggle to keep up with inflation, which means that money held in these accounts can lose value in real terms over time.

Investing should be a long game with a carefully thought-out strategy to reach specific objectives at different milestones in your life. Your portfolio should certainly be reviewed regularly to make sure you are optimising your returns. An independent financial adviser will help you establish what investments are suitable for you in terms both of the projected returns and the level of risk you are taking. Some kind of portfolio management – where an experienced investment manager makes changes to your portfolio at agreed intervals to meet or exceed a benchmark such as the FTSE 100 – can be helpful to keep your investment on track.

An investment strategy will help ensure that you are making the most of tax-efficient opportunities such as ISAs, putting aside sufficient funds into pensions to provide for your retirement, and managing the risks you are taking with investments through diversification. A strategy will also allow you to build in preferences such as your ethical position without compromising potential growth.

An independent financial adviser has the experience and knowledge to help you plan for your financial future. We use planning tools such as lifetime cashflow planning to demonstrate what your money will do over time in different scenarios, allowing you to plan for a range of possible life events.

Any opinions expressed in this article do not constitute advice. The value of an investment and the income from it could go down as well as up. The return at the end of the investment period is not guaranteed and you may get back less than you originally invested.

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