I sense a change in conversation in the last week or so. We are not asking when lockdown will end or how long it will go on for but asking what is the exit strategy and what social distancing measure will be kept in place. It might only be a slight shift in our way of thinking, but it shows the positive nature of humanity. I believe the initial shock of the lockdown has passed and we all believe we will see this health crisis off and humanity will get back to where we were (Alternatively, if your point of view is dictated by the headlines you might think we are all doomed!) I am not betting against humanity, it’s a powerful force. The two emotions that collide here are fear vs faith in the future.
The investment decisions you make will impact the rest of your life. The stock market is there to test you. The current crisis may be the greatest test you’ve faced. Remember, the stock market is a collection of the greatest businesses on the planet. We regularly lose a few businesses, and unfortunately in the coming weeks and months we will hear more and more about businesses failing (some of which would have failed anyway). This is obviously very sad for the employees and can affect supply chains and the local community. But human ingenuity also means we gain new ones. Capitalism is a success story.
In my previous blogs I have spoken about a variety of subjects including diversification, Bull and Bear markets and why you should stay invested. However, I have not mentioned one of the best ways to deal with volatile investments, do not look! I do not know how often my clients look at their investments, if you are looking daily, weekly or monthly, I would suggest this is too often. I personally look at my pension once or twice a year. Your investments will continue to fluctuate; however, your portfolio is positioned where it needs to be. Looking at the prices of the stock market day by day will fill you with anxiety. The less you look the better you will do, but more importantly the better you’ll feel. I know I have shared this with some clients previously, however the emoji guide to investing, speaks volumes to me.
I love the saying, Money is like a bar of soap, the less you touch it, the more you’ll have. You haven’t checked the price of your house day by day because you can’t. If you could, the price of it would be considerably less than the figure you have in your head. However, as you’re not selling your house the price is irrelevant, you still own the same number of bricks. The same is true with your investment portfolio. The prices have changed but you still own the same number of units. When the story changes, the prices will change and believe me the story will change.
The reaction of an investor during uncertain times can be to make changes, this is a natural human behaviour. Whilst your investments are already diversified and no changes are required, I have put together a list of three financial planning tips you can change/review.
In the simplest terms making a Will gives you control over who receives your estate you have accumulated when you are no longer with us.
An LPA appoints an individual to serve as the ‘attorney’ for the donor when they become incapacitated due to declining mental health, brain injury, or a physical injury that has rendered them incapable of communicating their own wishes.
It allows the attorney to make decisions that directly and personally affect that person, which can include their financial arrangements, the healthcare they receive, where they live, and even decisions like whether to sell their house.
An LPA does not instantly give power to the named attorney though – it has to be triggered when the appropriate circumstances arise, which is often when the individual involved has experienced a cognitive decline associated with ageing, or following a major accident or injury.
Please find below a link to government website providing further instructions and how to start the process.
https://www.gov.uk/power-of-attorney/make-lasting-power
I believe this helps to highlight the real important things in life, gives you something to look forward to and a document that you can refer back to once we are through this reminding you of your future plans and aspirations.
I am not necessarily talking about cutbacks but making sure you still get value for your money. A good starting point could be from companies who provide your energy, broadband or your mobile phone. Alternatively, now you have more time and spending less, you might decide to try a subscription service.
I have uploaded all my previous blogs to my website so you can refer to them if you wish.
As always, stay healthy and take care
Kind Regards
Daniel Midwinter FPFS
