Investors warned to prepare for a market correction

Huddersfield-based independent financial advisers Robertson Baxter said with shares in the US at an all-time high and in the UK near an all-time high, investors should be vigilant.

Stephen Baxter, joint managing director, said: “A correction could be short and sharp, but no-one knows when this will happen - that is what makes it a crisis.

“You can mitigate any potential losses by having a long-term plan and a portfolio that is diversified in terms of assets and geography. This will enable you to navigate the falls and subsequent bounces backs with the least trouble.”

This month marks 10 years since the start of the upheaval that led to the financial crisis of 2008. The UK saw queues outside Northern Rock branches as people tried to withdraw their money, signalling the first ‘run’ on a UK bank in a generation. A year later, Lehman Brothers, a 150-year-old global institution, filed for bankruptcy in the US.

According to Mr Baxter, the investment winners of the financial crisis over the last decade have been government bonds or gilts due to historic low rates of interest.

“They have outperformed most other investments, enjoying a total return (income and capital) of 85.2 per cent,” he said.

Shares have produced a total return of 65 per cent primarily through the reinvestment of dividends.

The worst performer for investors over the past 10 years has been cash deposit savings, which returned just over 11 per cent on average.

Mr Baxter said shares are likely to outperform bonds over the next 10 years, although there may be a reliance on dividend over capital value again.