Investors and pension savers have been urged to stay calm amid the turmoil caused by the global stock market dives.

Billions of pounds have been wiped off the value of shares over the past few days (see the Shares decimated MSE News story).

Key Points

  • Investments usually for the long-term
  • 'Time for bounce-back'
  • 'Slump could be buying opportunity'

The FTSE 100 index of the UK's largest companies has shed almost 10% of its value this week (at the time of writing it stands at 5,365).

However, experts point out that investments are usually a long-term game, and unless anyone with cash linked to the markets needs to draw their money soon, there is time for the market to bounce back.

What's more, many with their pension tied up in the markets, who continually buy units with their cash each month, will now be buying them at cheaper rates given the slump.

'Stay clam'

Laith Khalaf, pensions analyst at financial adviser firms Hargreaves Lansdown, says: "Pension investors retiring twenty years hence are unlikely to rue this week's stock market falls when they eventually come to draw on their pension.

"Those close to retirement have greater cause for concern, though may have been sheltered to some extent by de-risking their pension investments.

"Pension investors should regularly assess their pension investments to make sure they still suit their personal circumstances and attitude to risk, particularly in the run up to retirement.

"Those close to retirement who remain fully invested are most at risk of seeing sharp falls in the market translate directly into a lower pension income.

"Pension investors should seek to reduce risk as they approach retirement so that they do not experience big swings the in value of their pension fund just as they are about to draw on it.

"Those further away from retirement can remain a bit more sanguine as their investment is long term in nature and they are therefore able to ride out the peaks and troughs of the stock market. Indeed many pension savers invest on a regular basis, there is therefore a silver lining to falling stock markets: regular investments buy in at lower prices.

"The UK market is now over 10% cheaper than it was a week ago. It could fall further, however, this could also be a good long-term entry point."

What about final salary pensions?

Some pensions, where your income is dependent on your salary, are shielded from the market.

If you have a final salary pension, your employer or scheme manager carries the risk, not you.

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