As the New Year’s Eve fireworks lit up the night skies, who knew what the world was headed into as we moved into 2020. Anticipation and excitement about a fresh new year were swiftly tarnished as the Coronavirus infiltrated every corner of our planet.
I think we can all agree that no one has been immune to the effects of its arrival and it has been a tough road so far this year. The epidemic has effected, and still continues to effect not only how we live and structure our lives but how we work, the health of loved ones, parents becoming teachers and businesses of all shapes and sizes trying to weather the storm that it has left in its wake. The lyrics, “We’re all in this together” certainly ring true and it has been somewhat of a comforting thought.’
The turmoil in markets during Quarter 1 and into Quarter 2 was an unsettling time for investors and understandably so. Recent rallies have been spurred in part by a rejuvenated sense of positive sentiment with the easement of lockdowns enabling economies worldwide to resume to a new level of ‘normal’. The implementation of Government fiscal stimulus packages, the support of Central Banks monetary policy measures and hopes of a vaccine have also added encouragement and optimism. We look ahead into Quarter 3 with a refreshed sense of enthusiasm with the recovery road ahead already showing some promising signs. It is however important to acknowledge that it may be a bumpy ride, still paved with some uncertainties.
Below are a few points to bear in mind in terms of how, as an investor and adviser we need to view matters concerning investment interests.
Top Strategies for Investment Success
One: Have A Plan & Stick To It
First and foremost, you need to have a well thought out devised plan in terms of how your finances are structured in order to achieve your short, medium and long-term goals. And stick to it! As Benjamin Franklin said, “If you fail to plan, you are planning to fail.”
Constantly changing your plans or abandoning ship is not fruitful and can leave you stranded not only in terms of your financial objectives but also with your emotional relationships to money and investing.
As your trusted adviser, it is an essential part of our quarterly review appointments to ensure that we are on the same page, so your financial plans are fit for purpose with any changes being recognised and taken into consideration.
Two: Put Your Emotions Aside
Sentiment is a big driver of market performance and negativity can spread like wildfire causing investors to become unnerved and panicked. It is normal to feel this way, however, do not allow it to consume your mindset and throw you off course.
In times of uncertainly, it could be detrimental to react to short-term market ‘noise’ and make a knee-jerk decision that you may later regret all because emotions got in the way. As uncomfortable as it may be, we advise our clients not to panic and to put their behavioural impulses aside to remain disciplined.
Three: Ride The Waves
We always remind our clients that investing is cyclical, and things will come round full circle. Seeing a depressed value of your portfolio for a period of time is naturally not pleasant however, speed bumps are to be expected and it is important that we are appreciative of the complexities and challenges that our world brings and accept that things may not always be smooth sailing. Navigation through times of market stress by leaning on basic investing principles such as suitable asset allocation, diversification and risk management is key.
Being supported along your investment journey with our competent and expert advice will give you the best opportunity in realising your long-term goals.
Four: Treat Volatility As An Opportunity
Volatility is quite normal and part of the economic cycle. It should be viewed as an opportunity and as a leverage. Whilst we understand that this is not always possible for clients, many clients have recently been adding to their investments in order to take advantage of the selloffs in markets.
As the famous Warren Buffett says:
You pay a very high price for a cheery consensus. It won’t be the economy that will do in investors; it will be the investors themselves. Uncertainty is actually the friend of the buyer of long-term values.
Written by Rachel Shearwood, Wealth Adviser