These are strange times indeed. The Corona Virus situation continues to evolve and whilst it will dominate our lives in the weeks and months ahead, we’d like to concentrate on the implications for our personal finances & investments.
We wouldn’t be human if we didn’t feel some level of fear at current events whether that relates to our health, our job (and that of our families) or our day to day and future finances.
To put a sense of perspective on things, I think we should look to history as a guide to what may lie ahead. Over the last 100 years the world has witnessed 3 pandemic’s, numerous wars, recessions, natural disasters, booms, busts, rising interest rates, falling interest rates, inflation, deflation and everything in-between. Not only have we survived, we’ve thrived, standards of living have increased as has life expectancy. We still face many issues (climate change and poverty to name just two) but it is clear that huge progress has been made.
Our work as Financial Planners is to ensure our clients use their money in a way that allows them to do the things that are important to them in life. The key question we can answer is “Am I going to be OK financially for the rest of my days’’. Knowing that they are going to be alright gives our clients a profound sense of security and reduces stress particularly at times like this.
So, are we all going to be OK? JFK once said that “no problem of human destiny is beyond human beings’’. If, like me, you believe that JFK is right, then I think you should try to put the current crisis into perspective and look to the future with renewed optimism.
For those of you who are dismayed at the sharp recent falls in the value of your investments, we would encourage you not to panic (we understand that this can be hard sometimes). Instead, go back to basics; clarify your objectives and goals, develop a Financial Plan to help you achieve those goals and then (and only then) invest your money to ensure it is a key driver of your Financial plan. As a very famous soccer player from Cork often says “Fail to plan, plan to fail’’.
PS. Everyday, we’re being asked for our view on investing in the stock market in the current environment. Human nature is such that we often feel it’s less risky investing in the stock market when it is rising and at its peak, than when it’s falling. We contend that, with recent falls in value of 20% and more, it is less risky to invest today than it was a month ago. If, like us, you believe that the great companies of the world will, over the long term, continue to innovate and thrive, then investing in the great companies of the world (for the long term) is always a compelling proposition. The current discount makes it a little more compelling.
Written by: Coman Brady and Enda Brady, iQ Financial, www.iqf.ie