Ashby's Answers: How can we cope with volatility?

ASHBY'S ANSWERS

Interest on deposits is a paltry 0.5% and 10-year gilt yields are 2.0%.

Clearly, with UK inflation remaining stubbornly above 4.0%, both private investors and pension funds must invest in assets with higher returns to provide inflation-beating returns. This traditionally steers investors towards asset classes which have a better initial yield (eg corporate bonds and commercial property) or those with good income growth prospects (eg UK and global equities). However, although equities, corporate bonds and commercial property have typically outperformed cash over the longer term, they often have much higher levels of volatility – resulting in large swings i...