Investment guide
The value of investments can fall as well as rise, and you may not get back the full amount you invest. Eligibility criteria, fees and charges apply.
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Stock market fluctuations Open in new window
The causes Open in new window
Diversified portfolio Open in new window
There’s a common stock market saying: ‘it isn’t about timing the market, it’s about time in the market’. And the basic principle of leaving your money where it is and letting it ride out the highs and lows is a good one.
It’s not about making overnight gains, though these can happen too, it’s about buying into the idea that investing is a for the long haul.
What causes stock market fluctuations
- Supply and demand
- Uncertainty
- Confidence
Supply and demand OpenClose
Supply and demand
Put simply, if demand for a stock is high, more people want to buy it and the price increases, and if demand is low, the price drops. These price fluctuations are influenced and determined by the perceptions of investors. They monitor and follow the performance of companies and look at how much they’re earning, their actual value and how they might perform in the future. But there are also other factors at play when investors are assessing the values of company shares.
Uncertainty OpenClose
Uncertainty
Anything that affects the confidence of investors and causes them to sell their investments can make the market fall. These could be political events, like Brexit, changes of governments or instability because of conflict. And when investors are uncertain, the markets tend to swing up and down more dramatically and more regularly.
Confidence OpenClose
Confidence
On the other hand, if investors are confident, they’ll invest more and sell less, which means less volatility, and this usually pushes prices up.
The long-term benefits of a diversified portfolio
A diversified portfolio of investments means that your funds are spread across a range of assets. This guards against having ‘all your eggs in one basket’, which reduces your exposure if one fund or sector runs into trouble.
Royal Bank Invest is managed by the experienced investment managers at Coutts, theycarefully maintain a mix of assets to make sure there’s a sensible spread at the customer’s chosen risk level. By sticking to a long-term goal and investing in a diversified portfolio, you could be better placed to ride out those short-term fluctuations.
Get started with Royal Bank Invest
You’ll need to be a Royal Bank customer with Digital Banking, aged 18 – 84 and a UK residence for tax purposes.
Click “Continue” to log into the Royal Bank Invest portal.
Learn more about investments
Whether you’re an experienced investor or just finding out what investing is, we’ve got a range of articles to help you understand more about investing.
We regularly update our articles depending on what’s happening in the market so check back for future updates.
