This article was sponsored by Fidelity, but all opinions are my own. 

Important Information: Please be aware that the value of investments can go down as well as up, and so you may get back less than you invest. The information in this article is not a personal recommendation for any particular investment. If you are unsure about the suitability of an investment you should speak to an authorised financial adviser. Tax treatment depends on individual circumstances and all tax rules may change in the future. Investors should note that the views expressed may no longer be current and may have already been acted upon.

With everything that’s going on right now and the uncertainty surrounding finances, Fidelity wanted to put together a Q&A session to answer some of your burning questions.

I asked you over on my Instagram what questions were on your mind, and Fidelity have got one of their investment experts, Tom Stevenson, to answer them for us.

Let’s take a look at your questions and his answers now:

Is Now a Good Time to Invest?

I would always recommend investing steadily through the ups and downs of the market. Doing so takes the emotion out of investing, which means that you will put money to work when it feels least easy.

History shows that these difficult moments are often the best time to invest. The market has rebounded quite strongly from the lows in March, but it remains well below the peaks earlier in the year. If the economic damage from lockdown is contained this could mean that shares are cheaper than they were.

Active or Passive Fund Strategy Preference Right Now?

Passive funds are simple to understand and tend to have lower fees than actively managed funds. In the long run this can help your overall returns because the cost of running a fund can eat into its value over time.

However, there are disadvantages to passive funds too. Because they simply try to track the performance of an index, they are certain to lose value in a falling market.

By attempting to pick winners and avoiding losers, an actively-managed fund might outperform an index and so help to maintain the value of your investments in a moderately falling market. In some cases it can be worth paying a bit extra for a good fund manager.

How Much Do You Need to Get Started with Investing?

You can start investing with little money by setting up a regular savings plan from as little as £50 a month. Investing regularly in this way is also a great way to make sure your saving becomes a habit and you are not tempted to stop putting money to work when markets become volatile, as from time to time they will.

What are the Best Investment Options Whilst Interest Rates are So Low?

Low interest rates are a challenge for investors because they force investors to take slightly higher risks with their money in order to generate a decent income.

The returns on the safest investment of all, cash, are particularly unattractive at the moment. Shares have until recently provided a way around this problem because dividend yields have been much higher than the interest income from cash but in many cases, dividends have been cut thanks to the Covid-19 situation.

Some government bonds offer a higher return than cash but with lower risks to your capital than shares.

Is this a Good Time to Start Investing Given the Volatility of the Markets at the Moment?

Markets always seem uncertain at the time, so now is as good a time as any other to start investing despite recent volatility.

In fact, the falling in markets in February and March this year may have provided an opportunity to invest at more attractive prices than earlier in the year.

That said, I would always recommend investing regularly throughout the ups and downs of the market and to try and avoid timing the market. It is impossible to consistently do well.

How Should a Beginner Go About Investing?

Beginner investors should probably start with a fund rather than try to make individual investments in company shares while they learn about how stock markets work and gain some experience.

A passive fund that simply tracks an index like the FTSE 100 is a reasonable way to begin because you do not have to make a decision about which fund manager to entrust with your money.

A passive fund will match the index. Another good starting fund might be a multi asset fund that spreads your money across different investments like shares, bonds, property and cash.

How Are Endowments and Private Pensions Likely to Be Affected?

Whatever the investment vehicle, your savings will be affected by the overall level of the stock market.

This will be determined by a range of factors but difficult as it can feel at the time as investors, we have to (where we are able to) stick to that longer-term view of investing and wait for the recovery that we are all eagerly awaiting. Selling out of assets when they are low in value crystalizes your loss and so this should be avoided when you can.

 

How to Start as a Lowish Income Earner?

You can start earning with little money by setting up a regular savings plan from as little as £50 a month.

Investing regularly in this way is also a great way to make sure your saving becomes a habit and you are not tempted to stop putting money to work when markets become volatile.

I’m too Scared to Look at My Investments – I’ve a Feeling that My House Deposit Has Gone

Stock market investing is for the long-term. We always recommend that investors should only put money to work in the stock market if they are prepared to lock it up for five years or more.

If you have a shorter-term requirement, such as a house deposit, then a less volatile investment such as cash may be more appropriate.

Should I Still Be Investing in My Private Pension at the Moment?

I would always recommend investing steadily through the ups and downs of the market. Doing so takes the emotion out of investing, which means that you will put money to work when it feels least easy.

History shows that these difficult moments are often the best time to invest. The market has rebounded quite strongly from the lows in March but it remains well below the peaks earlier in the year. If the economic damage from lockdown is contained this could mean that shares are cheaper than they were.

Should We Start Investing in Property?

Property has been a good investment over the years, especially more recently as interest rates have been cut, reducing the cost of a mortgage.

Looking ahead there are no guarantees about any form of investment so the best way to manage that uncertainty is to be well diversified.

Investing in the stock market alongside home ownership is a great way to benefit from both forms of investment at the same time.

Please remember that stocks and shares are not a 100% risk free way to save. This post was sponsored by Fidelity but, aside from the answers provided as part of the Q&A, all opinions are my own.