Impact of Stock Market Crash
on Investment Funds
Almost all investment funds have been
adversely affected by the financial crisis of 2008 being one of
the worst ever to occur. This has prompted investors to compare
the stock market crash to that of the Great Depression of the
1930s. However investors neednt despair about the future
because historically the market regains its lost glory after a
given time and things begin to lookup again.
Whatever may be the nature of the
financial crisis it doesnt usually have a serious effect on
long term investments because of the propensity of the market
to bounce back robustly after every crash. Hence every long
term investment is sure to gain almost double in its value when
the market recoups.
An analysis of the Great Depression that rocked the US between
1929 and 1931 proves the above point. Although the shares lost
about 40% of their value during the cash it survived and the
value increased to whopping 147% within the next five years.
The bonds held during this period would have grown to three
times its value by now. This bounce back is astonishing when
you consider that money deposited in a savings bank account
during the period would have gone up to only double its
purchasing value in 2008.
Hence long term investors neednt
panic overtly into selling away their shares when a crisis
occurs because selling at this time will definitely cause them
to suffer huge losses. Instead they should hang on to their
shares as much as possible and sell off only at the appropriate
time when the market gets normalized. Hence holding on to your
shares is normally a wiser strategy than selling off in panic
at the wrong time. At any case your shares are likely to grow
more than double within a period of five years or above than
the money put in a typical savings account.
Funds invested in bonds and
schemes such as pension and retirement plans are meant for the
long term. Hence a global financial crisis is not always the
right time dispose off these reliable nests of
eggs.
Financial experts therefore advise
that smart investors should hold on to their portfolios during
a financial crisis and wait till the market regains and settle
down before considering whether to sell. You should watch the
market carefully and move at the right time when you feel the
prices are somewhere to your liking. This could be your best
option at a time uncertain conditions. You may also want to
consult a financial advisor or your fund manager for guidance
to out maneuver the tricky and complex layout of the present
financial labyrinth. This will enable you wisely choose your
investments.
Anjitha is a financial
adviser and well known for his finance related articles . You
can find more financial articles written by the author by
visiting the following link .
http://www.thefinanceworld.co.uk/is-icici-savings-account-in-the-uk-safe.html
| 
