Riding the highs, and experiencing the lows, it is the way of the investment market. However, the key to sound and quality investing is learning how to keep calm when the market is in turmoil. Yes, this includes our markets today, where Coronavirus has caused a shocking amount of volatility.
As per the Government Guidelines, we are now all home working, however, this is not new to us, we have always embraced technology and built our business around the need to have a mobile workforce. The post is still being collected and processed although we are seeing delays in the processing and delivery. We have moved to virtual meetings to field your question.
Here are some ideas that can help you manage your emotions and expectations during the current market uncertainty.
Take some time to relax
When you first open your phone, you might start to become concerned, especially with the volume of information on the Coronavirus pandemic. No matter if the market is a bull or a bear, the changes can impact you in the thousands of £’s. However, that is exactly when you need to take a minute and relax.
A couple of ways to relax are to do some deep breathing exercises, do some exercise, or take a walk. If you’re practicing social distancing, online workout videos can help you get moving in the comfort of your own home. Taking some time before sending that email or picking up the phone will make the difference between an emotional decision and a smart decision.
Remember the past
The stock market is nothing but repetitive, we should all remember the 2008 recession. The market started to fall, and investors were panicking, the news outlets were full of bad news, however, downturns are a natural occurrence in stock markets. Whilst it is difficult to say how long the recovery will be, markets have always recovered. It is during this uncertainty that we as your advisers will help and guide you through these uncertain times to ensure your investments are protected and continue to achieve your aspirations.
If you can remember that the market will correct itself, even in the wake of COVID-19, you will be well on your way to managing your emotions and expectations during market uncertainty.
The chart above shows a history of S&P 500 index total returns in US Dollars between January 1926 and December 2018 using a threshold of 10% for a downturn.1
Depend on your financial adviser
You have trusted us through the good times, so why should that change when the market takes a bit of a downturn?
We are here to help you to navigate the choppy seas and ensure that you (and your money) come out stronger.
We are your financial planners and no matter what is happening on the market, we are there for you and we aim to be able to help you to manage your emotions with ease.
Final Thoughts
When it comes to managing emotions and expectations during COVID-19 market uncertainty, there are three essential tools that you can use. You should:
Take some time to relax;
Remember that the market always corrects itself over time; and
Remember we are here to help and support you.
Using these tools will help your overall financial strategy and help you avoid emotional investing!
1. Past performance is no guarantee of future results. Indices are not available for direct investment; therefore, their performance does not reflect the expenses associated with the management of an actual portfolio.
The chart end date is 12/31/2018, the last trough to peak return of 385% represents the return through September 2018.
Bear markets are defined as downturns of 10% or greater from new index highs. Bull markets are subsequent rises following the bear market trough through the next new market high. The chart shows bear markets and bull markets, the number of months they lasted, and the associated cumulative performance for each market period. Results for different time periods could differ from the results shown.
Source: S&P data © 2019 S&P Dow Jones Indices LLC, a division of S&P Global. All rights reserved.