In the last few months, we have watched financial markets fall as the global economy responds to the COVID-19 health emergency. Share markets both here, and the US, have fallen by approximately 30%, which has taken many investors by surprise.
Regardless of your position or life stage, our mantra remains the same – focus on a long-term investment strategy. Here are some helpful tips for surviving, and ultimately prospering:
- Maintain a cash reserve: retirees should keep sufficient funds in cash or a term deposit to meet future income needs (up to three years), which will provide peace of mind.
- Switch off the noise: don’t read the doom and gloom in the media each day, or check your stock prices every hour. Take comfort in your long-term strategy and avoid the anxiety and worry from daily pricing movements.
- Stay composed: We can’t control market corrections, however, we can control how we react. So stay composed and make decisions that are focused on the long term.
- Keep informed: although it would be easy to bury your head in the sand during the crisis, you must stay tuned to the latest investment advice and make adjustments as necessary.
- Review your portfolio: take the opportunity to review your investments. It may be an opportunity to restructure your portfolio and take advantage of lower buy prices.
- Stick to your plan: your portfolio may have declined in value, but it’s important to focus on your long-term investment strategy. Markets do recover and the GFC is evidence of this.
At present, there is a great deal of uncertainty as to when the health emergency will pass, so downside risk remains. That said, many company valuations (and stock prices) have been savaged, presenting investors with opportunities to buy businesses at attractive prices.
This includes many blue-chip companies, including the banking and resources sectors. Our Australian banks will likely experience some pressure in the short term due to bad debts, but they are also some of the most well-capitalised banks in the world. Similarly, selected resources companies present attractive buying opportunities, with minimal impact to current iron ore prices.
The main thing to remember is that PPT Financial is here to help you navigate through these uncertain times. If you would like to discuss your portfolio, please contact us directly. We are working remotely, but continue to conduct client appointments via phone or video conference.
To make an appointment with an advisor call PPT Financial on (03) 5331 3711.
DISCLAIMER: The material and contents provided in this publication are informative in nature only. It is not intended to be advice and you should not act specifically on the basis of this information alone. If expert assistance is required, professional advice should be obtained.