SPROWSTON DIRECTORY APRIL 2021

Time in or Timing
Trevor Goodbun
Trevor Goodbun, is the author of Plan A Secure Retirement,
published by Hodder, and a partner at Wensum Financial
Planning
One of the most frequent questions we get asked
is when is a good time to invest, and when is a
good time to cash in an investment.
The falls in value last year brought this into sharp
focus when the FTSE fell by over 30% in a short
period of time. Understandably this led to a
number people worrying about the value of their
pensions and other investments.
So, when is a good time to invest and when is a
good time to cash in? The glib answer to that
question is never and now.
There is an old expression that says time in the
market is more important than timing. What this
is saying is that the length of time you are
invested is more important than trying to time
when to enter and leave the market.
Pensions often will have invested in FTSE100
companies as will many other investment (but
not cash) ISAs. However, unless your pension or
ISA is solely invested in the FTSE100, the figures
you are looking at are probably only a small part
of the complete picture.
Certainly whenever we recommend pension or
investment funds we will recommend a wide
range of funds that invest far and wide not just
one particular market.
Most workplace pensions are set up this way as
well. In fact, most workplace pensions will have
an investment mix that will vary according to
when you are due to take the pension. So even if
you are in the same workplace pension as the 18
year old working next to you, you are likely to
have a different mix.
I agree with that but perhaps not necessarily at
face value, but before I address that questions let
me clarify what is meantwhen we say the
market.
The falls that get reported on the news are
usually for major stockmarket indices such as the
FTSE 100. This is the stockmarket value of the
top 100 companies in the UK.
This fall is usually accompanied by a comment of
the financial journalist reporting the story “you
may not think this applies to you but it affects
everyone who has money invested in a pension
or an ISA”
I am of course working on the assumption that
not many 18 year or even 21 year olds are
reading this.
Most of our clients’ pensions did fall in value last
year but not by as much as the FTSE, or the DOW
or most of the other major indices that get
reported.
That not to say a pension can’t fall in value by
30%, it can and perhaps by more, but don’t
confuse a fall in the markets with the value of
your pension.
As usual I have run out of space to cover
everything I want so I will come back to the
question of time in and timing - next time.
There is some truth to this, but as is so often the
case with a sound bite it’s not the full picture. (I
am not sure if a picture of a soundbite is mixing
my metaphors or not, but it works for me)
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