Stock Market Watch

With the UK and world stock markets experiencing some volatility at the moment, investors up and down the country are naturally concerned about the value of their savings.

The first thing to say is, it’s important to remember that stock market falls are part and parcel of investing in shares. And while it can seem a bit of a roller coaster at times, in our experience savers who continue to take a long term view tend to fare better than those who respond hastily to short term market movements.

Here are a few things to consider.

• The only important prices an investor needs to worry about are the price they buy at and the price they sell at. And the only investors who make a loss in a serious stock market fall are those who cash in their investment and turn a paper loss into a real one. It may seem an obvious point but even ‘experts’ seem to forget it at times like this.
• For anyone who is looking to invest more money, but is unsure about putting more into the stock market right now, remember that periods when share prices have dropped suddenly do offer rare opportunities to buy at lower cost. Then if the market rebounds those shares can shoot up in value. This could be an opportunity to take advantage of our newly launched Virgin Climate Change Fund. It’s an environmental fund with a difference, investing in select companies with the potential to drive outstanding profit growth while being environmental leaders in their industries.   

We’d like to remind all Virgin Money customers that our Bond & Gilt Fund offers a less volatile growth alternative to our FTSE All Share Tracker Fund and Virgin Climate Change Fund, and you can also switch investments free of charge between our funds any time you like. However, please remember that if you switch units from our tracker fund or Virgin Climate Change Fund after the market has fallen you will be ‘locking in’ the loss in unit price, by selling those units after they have dropped in value. So while switching to our bond & gilt fund can protect your savings from future falls in share prices, it can’t protect you from a fall that’s already happened.

We’d also like to reiterate a point we often make to customers – that when it comes to investing over the long term, share prices are not the be all and end all. Share dividends can play the lion’s share in growing your savings.

To illustrate this, if your great grandfather had invested £100 in the UK stock market in 1899, that £100 would now be worth £22,426* in today’s money. But if he’d spent the dividends instead of reinvesting them, that £100 would now only be worth £197**. While no one is realistically going to invest for a hundred years, it does show the huge importance of share dividends over share prices in growing your money. It’s not just about watching the FTSE index on the evening news. In our FTSE All-Share Tracker Fund and Virgin Climate Change Fund dividends are normally automatically reinvested for you.

* Source: Barclay’s Capital – Equity Gilt Study 2006, £100 investment, end 1899 to end 2005, gross income reinvested (** income not reinvested).

Remember, past performance isn’t a guide to the future, the value of investments can go up and down and you may not get back all you invest.

We never forget it’s your money and you can take it out whenever you like. However please remember that if you don’t need to withdraw your money, the worst time to cash in your investment could be when share prices have just taken a fall, as your savings will have dropped in value. That’s often a time when the more clued-up investor will be putting more in, taking advantage of lower share prices.

If you have concerns or would like to discuss your options, please do call us on 08456 10 20 30 and we’ll do our best to answer any questions you may have. Our lines are open from 8am to 9pm Mon-Fri and 9am to 6pm Sat.