Graeme Wake, Senior Wealth Manager at Wren Sterling, runs through the questions people might be asking themselves after the recent period of market volatility:
“With the coronavirus infection and death rate in the UK thankfully on a downward trajectory you might be using the time to reflect on how your pension, ISA and other investments performed.
Have your investments behaved in the way you expected them to?
How much protection did they give you from the turbulence?
If you’re managing your own finances, you might feel a bit like a boat in a storm, buffeted by winds and at the mercy of forces you can’t control. With markets experiencing volatility, it is natural to seek safe havens but investing works counter-intuitively and cashing out once the crisis started would have left you out of pocket when the markets rebounded.
If you didn’t gain from the investment opportunities during the market sell off, why?
It might be that you didn’t get advice at the time telling you to stay in your seat. Sometimes just a reassuring word and feeling like the disruption is only temporary can bring the emotional comfort we all need in difficult times without resorting to action.
Wren Sterling ran several webinars with investment managers exploring the historical precedents of market corrections and showing our clients that in every instance, timing the market would have been almost impossible. The key is to stick with it and benefit from the recovery.
If you have an adviser and you still feel that you’re not in control, maybe it’s time to consider an alternative!
- Looking further forward, how has the episode affected your retirement plans?
- Can you retire when you want to?
- Have you had to postpone and do you know for how that long that might be?
- What are your retirement options now?
Covid-19 could have changed your risk appetite and caused you to take a more conservative approach to your investments. It might also have caused material changes to yours or your family’s circumstances that need to be factored into your plans.
Your pension plans should be set up to decrease risk in the lead-up to retirement but if you’re now not going to be retiring at your planned date, or if you want to bring that date forward, you should review the composition of assets in your fund to make sure they are appropriate.
There’s also a lot of speculation about a potential second wave of the virus and the impact that may have on portfolios.
If markets experience turbulence again, will you be ready?
Now is the right time to review and take stock of your pension, protection and other investment strategies to make sure they are working the way you need them to and are set up to withstand whatever is coming down the line.”