Small investors told not to panic

Small investors are being urged by financial advisors to ride out the storm on the London Stock Exchange.

Small investors are being urged by financial advisors to ride out the storm on the London Stock Exchange.

The call comes after Tuesday's bloodbath that saw the FTSE-100 Index plunge to its lowest level for 16 months.

The Footsie sunk 113.9 points to 5980.1, its lowest closing point since October 1999.

It was also the first time it had finished below 6,000 points since last April.

The rout was caused by sharp falls in banking stocks amid fears of a costly mortgage price war, and the continuing weakness of the techs and telecoms stocks.

But independent financial advisors say they are confident of a rally in the near future, and add small investors should not be put off by the bear run.

Richard Smith, an independent financial advisor with the IFS Group, based in Crawley, west Sussex, said: "There is no reason to panic. I think yesterday (Tuesday) was an overreaction, there's been a mortgage war for the last two years. This is a cyclical market place and it will correct itself."

Mr Smith says investors should look to the medium to long term, and invest their money in funds for at least as long as three-to-five years. He admitted, however, that tracker funds may be out of favour.

He says such funds track blue chip stocks in the Footsie, and have been popular with investors because of their low management cost and the recent strength of the market.

Billy Singh, an independent financial advisor at London-based Oak Financial Management, says investors have to learn to live with falls on the market. "The worse thing you can do is pile out when the stocks are falling, you have to ride out the storm," he added.

Mr Singh stated, however, investors may want to look at balancing out their portfolio so it is not over reliant on equity returns.

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