The importance of a financial broker: navigating a volatile market

Popular investment routes such as saving up cash or buying a house are seen as sensible decisions, but the reality is that none of these routes are risk-free endeavours – and, in fact, some of the most popular financial markets are more volatile than they may seem. This article will explain how hiring an expert financial broker to help you could be a wise decision if you plan to enter the world of investments.

Property investment

On the face of it, nothing seems quite as safe as investing cash in bricks and mortar. However, there’s no guarantee that your new property will hold its value. If property prices decline, then you could find yourself owing more to your mortgage company than your home will sell for – a situation known as “negative equity”.  A broker will be able to explain how this might happen – and suggest some strategies for dealing with it if it does happen to you.

Stocks, shares and CFDs

The stock market has always been known for being somewhat volatile. While in one year it can deliver returns of 14%, in other years it can deliver an overall loss. An even more volatile version of stocks are CFDs (or contracts for difference): these offer a number of advantages, but because they’re leveraged, their values can rise and fall even more spectacularly.

Before plunging into these particular parts of the investment world, speaking to a broker is a smart move. It’s important not to let cost put you off here. Given that a broker is essential, you’ll probably have to pay for the service. It’s wise, then, to compare broker fees in order to find the most cost-effective service and ensure that any fees involved don’t subtract too much from your investment pot.

Cash savings

Saving up a wedge of cash and placing it in your bank account is often seen as a way to hedge against volatility. However, there is still some risk involved in doing this – and this risk comes from volatility in the wider economic conditions. If inflation rises (which it can do as a result of a variety of factors, including high demand or certain government policy packages), then the value of any cash savings could plummet. As a result, speaking to a financial broker who can explain these risks to you in greater detail and suggest some low-risk alternative investments that offer a defence against inflation could be wise.

Investing in any market can cause problems if not done correctly. That’s because volatility is actually everywhere: while it might perhaps be most obvious in environments such as the stock markets where dips and rises are highly common, volatility can also fuel phenomena such as inflation – which can attack your investments no matter how safe you might perceive them to be. That’s why having a good-quality financial broker on hand is smart: they will have seen it all before, and they’ll be able to match investment products to your specific needs and risk tolerance.