2020 was looking better until a few weeks ago when the world was hit by the Coronavirus. We believe that activity will recover with no real economic loss if this only lasts for a short period.
AMP Wealth Management NZ has recently released an article on "What to do when markets fall?" We found page 3 particularly interesting and very relevant to majority of our clients.
Are you comfortable with your investments?
If you do tend to get concerned or anxious when markets drop, it would be a good idea to check that you’re in the right type of investments. Think about your investment time-frame, when you will need your money, how much risk you’re prepared to take on to get to where you want to be etc.
If you’re not sure about this, make sure you talk to your Financial Adviser (or seek the assistance of an Adviser if you don’t have one) who can assist you through this process. When an Adviser helps you put an investment plan together, it’s always based on your needs, whether they’re short or long term. Generally longer-term investment strategies mean that your portfolio may have a higher proportion of “growth” investments i.e. shares and property. Shares, in particular, can deliver much higher returns over the long term but the ups and downs of the market along the way can test your nerves. If you are finding that it’s too much to handle then have a think about your investment mix to make sure it’s right for you, e.g. would you be more comfortable if you were to reduce the amount you have invested in shares and instead invest this in things that are less prone to ups and downs?
The aim is to make sure you’re comfortable that your investments are appropriate to meet your goals whilst being able to handle the short-term ups and downs along the way. Understanding how your money is invested can help to calm the nerves. Generally, Advisers will recommend that you invest your money across a range of investment types and the amount you invest in each type will be determined by your investment goals, time-frame, and your attitude to risk etc. If you’re not sure, ask your Adviser to explain it to you.
Our message to clients is to trust the research & “hug” your risk profile. In a big picture sense, the fall in share markets should be seen as just another correction after markets ran hard and fast into record highs this year from their last decent correction into August last year.