Staying invested really works

The coronavirus pandemic has caused panic across financial markets and forced many investors to question how much they leave invested. One of our clients has recently proved that staying invested really works…

Nobody wants to lose money or see their assets shrink. People work hard, save and look at ways to provide for themselves and their families by investing in things that will increase in value over time.

The very nature of stocks and shares means that portfolio values will rise and fall, sometimes dramatically.

That’s exactly what happened in March 2020 when Covid-19 shook the world. The same has happened several times in the previous twenty years.

The dot com bubble inflated quickly and burst as tech stocks rose and fell at the turn of the century. The 11 September 2000 terrorist attacks in New York shocked the world and global markets.

The 2007-2009 financial and banking crash is still fresh in everyone’s mind!

However, history shows us that markets recover. Trying to “play” or “guess” how markets will perform can be a risky strategy.

How has coronavirus affected stock values?

Coming right up to date, the coronavirus emerged in late 2019 but didn’t rattle the world’s financial institutions until March 2020.

Then it hit hard. Very hard.

Investors, businesses, governments and countries panicked and wondered how to respond. It was not expected. Most thought the virus would be contained at source.

It’s certainly been a wake-up call for everyone. Many stocks dropped as much as 25% in value. That’s enough to unnerve even the most level-headed investor.

How have investors reacted to market falls?

Our client is about 15 months from reaching retirement age. Next year, he is keen to draw a tax-free sum to pursue some life goals that have been planned for years. However, he does not want to draw down any income.

As part of the annual review process he wondered if it would be prudent to reduce his portfolio’s risk, or even swap some of his investment to cash.

Several conversations later he decided to stay invested. Our approach was to question his motivations. We wanted him to make the best decisions based on his situation.

He investigated future possibilities based on previous scenarios and decided that his situation was flexible. Second guessing the markets over the next year was impossible.

A moment of panic that could have resulted in crystallising a loss has worked out well for him. Since his review, his portfolio has recovered 6% and is almost back to pre-coronavirus levels.

That is due to it being a well balanced and diverse portfolio.

The importance of independent financial advisors

Logic Wealth Planning always offers customers balance. We have years of experience and have encountered many ups and downs in the financial markets.

We listen to customers, ask questions to make them think, listen some more, and then propose how to move forward.

It’s so important that we listen carefully and understand each customer’s unique set of ambitions and motives. That helps us to give the best, tailored advice for their circumstances.

Appreciating that every investment decision is different and will have different implications is vital. There is never a “one cap fits all” approach.

Pensions are long-term investments 

No matter what stage of the pension journey you are on it should be considered a long-term investment.

If you are ten, five or maybe one year away from retirement, there will be many things to consider. However, the fact remains that your pension pot will need to serve you well into the future.

Call us on 0808 1234 321 or email to discuss any aspects of pensions and saving for your retirement.

Please be aware the value of investments or income from them can fall as well as rise. We are here to help you make informed decisions as you put important things in place for you and your family.

* Logic Wealth Planning provides independent financial advice in Manchester, Bury, Rochdale, Cheshire, and the surrounding area, but not limited to the region.