We Plan for a Reason

 09 March 2020

We’re still in the early stages of understanding how the coronavirus outbreak will affect global health care and economics for the rest of the year. However, when we look at clients Life Timeline, we can see events that we’ve been anticipating for quite some time such as: children heading off to college, home upgrades, family holidays, elder care for your parents, and, of course, your own retirement.

Here’s why guiding you and your family through these life transitions is still the central focus of our planning, even during a significant bout of market volatility.

1. The big picture is always brighter.

Nobody could have predicted that a virus outbreak would disrupt global business soon after the BREXIT events and right in the middle of a contentious presidential election cycle. But market history did tell us that the record-breaking bull market of 2009-2019 wasn’t going to last forever. What goes up eventually comes down.

The further you pull back when you’re looking at market returns, the smaller today’s volatility looks, especially in comparison to big life transitions plotted on a 30 or 40-year timeline. Continuing to work towards those events we can see coming is a much more effective strategy than trying to predict the next natural disaster or the next market downturn.

2. You have options.  

While major market volatility is never about just one thing, the coronavirus is making it hard for companies around the world to buy raw materials from China and sell to Chinese customers. Stocks in the energy, travel, technology, and consumer goods sectors have been hit especially hard.

Luckily, your portfolio is not overly invested in any one company or any one sector. Spreading out your assets across a wide variety of investments – including more stable bonds and cash savings – provides some options during volatility. Diversification gives us the means to scout for rebalancing opportunities when prices are low. It also provides reserves that we can tap if you need a little extra help weathering market fluctuations.

What’s going to guide the decisions we make during this market correction, and the next one? How are we going to decide which levers, if any, to pull, and which to leave alone?

3. Following your own Timeline.

We can’t plan for the next significant market shakeup. What we can do is use the tools at our disposal to keep you and your family on track to navigate your life transitions and achieve your financial goals, no matter what’s going on outside of your home.

That’s why there’s no “one-size-fits-all” answer when people wonder what they should do during a moment like this. The millennial who just started working and investing is at a very different point on his financial journey than the CEO eying retirement in the next five years. The couple planning to start their own business has different financial needs than the couple with three smart children all angling for University degrees and the retiree planning to golf their way across the country probably doesn’t have the same concerns as the retiree who is experiencing ongoing health problems.

These scenarios all require their own unique, personalized plans. Some people will make the most progress towards their goals by sticking to their current saving and investing strategies, even as the markets are unsettled. Others might need to increase allocations to their cash reserves and still others might look for “buy low” opportunities that will pay off in the long run. In each case, the client’s Timeline is our guide, not today’s headlines.

 

We understand that volatility can be worrying, especially if you’re nearing retirement or newly retired. If you’d like to review your Timeline cashflow and hear a little more about our current market perspective, get in touch and we can meet up.

Whether news is good, bad, or somewhere in between, you can rely on our Lifestyle Planning process to keep your best interests first and your life goals in perspective.

 

The value of investments and income from them may go down. You may not get back the original amount invested. Investments should be regarded as long term and fit in with your overall attitude to investment risk and financial circumstances.

This content is for your general information and use only and is not intended to address your particular requirement or constitute advice.

 

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I've known Paul for over 5 years. Paul is friendly, relaxed and a pleasure to deal with. He is extremely knowledgable and serious about financial planning which makes the process stressfree and I feel very confident about the plans in place to maximise my income, particularly during retirement.