- Take control of the elements of your finances which you can manage; what you spend and save, the mix of your own portfolio and how you respond to the current market fluctuations.
- If you are working ensure you have easy access to cash, in case of a short or longer term period of unemployment or unpaid leave.
- Avoid knee jerk reactions – this situation can be unsettling but research shows we suffer twice as much pain from our losses as our gains so don’t exacerbate the situation by making quick decisions.
- Maintain a long-term view of the world economy and your investments; this year’s corporate earnings are unlikely to provide any reward, many investors will overreact, but it is unlikely the economic damage will be long-term or permanent and rewards will be there for the patient.
- Realign your investment portfolio, so that you can take advantage of the current market falls.
- Consider if you have additional funds to invest; you may be able to make your savings work harder as a result of reduced stock prices.
- If you can, buy stocks and shares. Think back to other crisis points – such as in the 2008 recession – if you feel you didn’t act accordingly at that point there may be scope to make some more informed decisions now.
- Dependent on your attitude to risk, ensure that any speculations on individual stocks or market sectors are restricted and instead use the skills of professional managers to help maximise returns and mitigate losses.
- Avoid guess work; the markets are unpredictable in the short-term so it isn’t sensible to use time and energy trying to predict what might happen; these are unchartered waters.
- Don’t listen to the ‘noise’; there is a lot of it at the moment and a range of experts commenting on every market movement. By listening you may become distracted from your long-term objective.
- Re-evaluate your attitude to risk and consider how your ideal investment portfolio is structured. You can use this insight when working with your financial adviser through the coming months and once the markets have recovered.
- Keep perspective about any losses bearing in mind that while your investment portfolio may have suffered in the short-term other assets, such as your home, cash/bond investments and long-term income earning, may not have.
- Take some time to consider what it is you enjoy doing most. The current situation prevents travelling, going out for a meal, enjoying concerts, socialising with friends or attending sporting events. By identifying what you miss you can plan well for when restrictions are lifted and life returns to normal, and use the acquired knowledge to guide future spending.
- Remain optimistic and consider what you might like to do in the months to come. Do make future plans and remember that, as we are seeing in China, following necessary precautions should lead to a dramatic improvement of the situation within a few months.
- You should always take a long-term approach to your investment strategy, and consider how you will look back on this in future years, and the advice you would then give yourself about how to react to a bear market.
It remains the case that current situation may feel difficult to navigate but we are here to help. If you have specific queries please contact our financial planning team.
Chief Investment Officer
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