As usual, the media will always put a spin on the news. Headlines such as "Massive losses in the markets" or "Largest one-day returns" are not uncommon in these media-intensive days. Unfortunately, they mean little to anyone in the real world, and certainly less to anyone who is already invested.

When an investment falls by, say, 10%, then it takes more than a growth of 10% to get it back to its previous level.

For example: if you had £1,000 invested, and it fell by 10%, you would end up with £900. If the investment then rose by 10%, that would bring it back up to just £990. This is because 10% of £900 is £90. Therefore, the market must rise by a little over 11% to make up for the 10% fall.

As you can see, gains do not equal falls, and so we must be even more diligent and aware of comments in the market as to whether or not they really affect our particular investments.

But what do you do if you are already invested?

Everyone pretty much knows that you should buy low and sell high. Unfortunately, this is virtually impossible to do because you can never tell the bottom of a market, and you can never know the top. Also, for most investments, going in and out of them will involve charges and fees which can wipe out gains. For example, if you thought the banks were a good investment and you purchased shares in one today, if those shares went up by 10% in a week and then you sold them, you would make a gain not of 10%, but of only 4-6%. This is because of the 'bid/offer' spread that the brokers apply to share dealings, which is the difference between the buying and selling costs that make up their income. This small point has caught out many investors, and must always be taken into account.

If you are invested, you should hold a range of investments from low to high risk. In the past 18 months, even low risk investments have fallen, although at a lower rate than equities. This mix of asset classes should have helped shield you from the 40% or so losses seen in the markets.

While there can be no guarantee looking ahead, we do believe that the worst is over now from an investment point of view. This does not mean that investments will not fall again, but that we believe that falls to the level seen last year are over. We believe that the slow climb back to where the markets were, has started. This will be a slow climb, and it will probably not be until the autumn of 2012 before we are back to where we were previously. However, we will move back to those more positive markets.

Lower risk investments such as gilts and bonds have already made some recovery, but this will now start to slow a little. In comparison to deposits, they should produce good returns, but these will probably be in the range of 3-6% pa going forward. Likewise with property, which has performed very poorly, and will only really turn as the economy itself turns.

Therefore, we believe now is the time to increase the risks on investment portfolios, and increase investments in the medium-risk area. The amounts that you move into this area will obviously depend on how aggressive you want to be, but a movement of 10-30% for most people would seem to be a sensible amount. This movement will, therefore, increase the risk of your investments. However, as the markets are down, now is the time to take advantage of this and move into them. This will have the effect of amplifying gains in your portfolios as markets recover, effectively enabling you to increase the speed of the recovery of your portfolios.

When speaking with our clients, we will be recommending this increase in risk. But if you would like to do this sooner rather than later, which is probably a sensible move, please contact us or your usual advisers to make the necessary arrangements.