Ask the expert: How should I invest if I’m worried about an AI bubble?

Fidelity personal finance specialist Marianna Hunt is a name that needs no introduction. With her vast knowledge and experience in the world of finance, she has helped countless individuals to make informed decisions about their money. And now, she is back to answer your burning questions and provide expert advice on all things related to personal finance.

This week, Marianna tackles a common fear that many investors have – a potential tech-fuelled stock market crash. With the rise of technology and the increasing dominance of tech companies in the stock market, it’s natural to be concerned about the impact it may have on your investments. But before we delve into the question, let’s understand what a stock market crash actually means.

A stock market crash is a sudden and severe drop in the value of stocks, which can result in significant losses for investors. It is often triggered by unexpected events or economic downturns, and can cause panic and chaos in the financial markets. While it may seem like a scary prospect, it’s important to remember that stock market crashes are a part of the natural cycle of the market. And as an investor, it’s crucial to stay calm and have a long-term perspective when it comes to your investments.

Now, let’s address the question at hand – how can you protect your investments from a potential tech-fuelled stock market crash? The good news is that you have already taken a smart step by investing in global index funds. These funds provide diversification, which means your money is spread across different companies and industries, reducing your risk exposure to any one particular stock or sector. This is a wise strategy, especially in today’s tech-dominated market.

Another factor to consider is the time horizon of your investments. If you have a long-term horizon, such as for retirement, then you can afford to ride out any short-term fluctuations in the market. It’s important to remember that the stock market has always recovered from crashes and continued to grow over the long term. So, while it may be tempting to panic and sell your investments during a market crash, it’s best to stay invested and trust in the resilience of the market.

However, if you are nearing retirement or have a shorter time horizon for your investments, it may be a good idea to rebalance your portfolio. This means adjusting your investments to reduce your exposure to riskier assets, such as stocks, and increasing your allocation to more stable assets, such as bonds. This can help protect your investments from any potential market volatility.

Apart from diversification and time horizon, it’s also essential to regularly review and reassess your investments. This means keeping an eye on your portfolio’s performance and making any necessary changes to align with your financial goals. It’s a good idea to consult with a financial advisor, like Marianna, who can guide you in making informed decisions about your investments.

In conclusion, while a tech-fuelled stock market crash may seem like a looming threat, it’s important to remember that it’s a natural part of the market cycle. By diversifying your investments, having a long-term perspective, and regularly reviewing your portfolio, you can protect your investments from potential market crashes. And with the right guidance and advice, you can navigate through any market turbulence with confidence.

So, don’t let the fear of a stock market crash hold you back from investing in your future. With a well-diversified portfolio and a long-term approach, you can weather any storm and achieve your financial goals. And with experts like Marianna Hunt by your side, you can rest assured that your money is in safe hands. Happy investing!