Any financial adviser worth their salt will build a robust plan for their clients ensuring sufficient savings on hand for short term and medium term needs whilst planning prudently for their retirement, that plan is more important than ever now.
There can be no denying the impact the Coronavirus has had on global stock markets and by extension people’s investments. Experts are referring to it as an exogenous event i.e. outside anyone’s control. There was much speculation that a “correction” was overdue, but no one could have foreseen what was coming.
The truth is we have been down this road before, remember back to 2008 when we had our last “Armageddon” with the global financial crisis. Lehman Brothers the American bank collapsed, stock markets tumbled, there was contagion in almost every industry and people swore that “this time it’s different, there is no coming back from this downturn” – the fact of the matter is the stock market did come back, it roared back in fact and was up over 300% between September 09 and January 20.
Undoubtedly It is worrying and disconcerting to see your investment and pension pots reduce in value, but you have to expect dips as things can’t be buoyant all the time. If you engage with a financial adviser on a regular basis you should have had these blunt conversations and what to do in such circumstances.
Below I outline what I have said to my clients over the last few weeks, I hope it will alleviate some of the worry you might be experiencing at present.
1) Investing is for the long term and patience is key
2) Nobody “saw this coming” – we are living in totally unprecedented times
3) When the last “crash” happened investors who did nothing had the best results
4) The stock markets will rebound over time – it always does
5) A study in the America found if you had an investment tracking the S&P 500 stock index over a 20 year period your average return would be + 8.5%. However had you been out of the markets on the 10 worst trading days in a 20 year period your average return would fall to 4%, had you missed the worst 20 days in 20 years the return would be 2% and had you missed the worst 30 days in 20 years you would be in a negative return – the old saying of “it’s time in the market not timing the market” rings true here.
There is an old saying that “sometimes the hardest thing to do is to do nothing” – that would be my advice to people at present who might be tempted to switch their investments or run to cash and exit their investment strategy. Just remember this tough time shall pass and investment markets will rebound.
Blueprint Capital Ltd t/a Blueprint Financial Planning is regulated by the Central Bank of Ireland. All content provided in these blog posts is intended for information purposes only and should not be interpreted as financial advice. You should always engage the services of a fully qualified impartial financial adviser before entering any financial contract. Blueprint Capital Ltd t/a Blueprint Financial Planning will not be held responsible for any actions taken as a result of reading these blog posts.