Remember that saying about March coming in like a lion and out like a lamb?
Unfortunately, the coronavirus is highly unlikely to dissipate that quickly. Still, the sentiment reminds us how bear markets are like winter showers nurturing spring flowers. For every ferocious bear we’ve historically encountered, an uplifting bull has eventually followed.
But it may be a while. And we aren’t discounting the downpour we must endure until then.
We want to remain informed about how you’re doing personally, so we can help you remain informed about the evolving financial landscape – especially about changes that might directly impact you, for better or worse.
What You Can Do for Yourself
There’s good news here: One of the reasons you partnered with us was to structure your plans and investments in anticipation of periodic bear markets like the one we’re seeing now.
It’s not new news coming from me, but essentially, among the most important things you can currently do for your financial well-being is to largely look past all the market’s mayhem, and focus instead on making the most of your life. Try to “set your egg timer to six months,” as this moving piece by Contrarian Edge’s Vitaliy Katsenelson suggests. Consider his advice (emphasis ours):
“We have been given a very unique opportunity to divorce ourselves from material things and spend time with our family. To really spend time with them. We have been given the rare opportunity to prioritise what is most important to us without guilt. The material world is on pause, at least for a few weeks. Try to make the most of it while you can.”
What Time Can Do for Your Retirement Planning
Again, if you are a younger investor, decades away from retirement, current market conditions can actually benefit you greatly.
You can buy equities now while prices are low (or at the very least not abandon the ones you already hold), and watch their expected growth compound over time. Especially if you can do this in a tax-sheltered account like a pension or ISA, you can build even more long-term wealth, even more dramatically.
And if you’re already retired?
However, if you are in or near retirement like the vast majority of people we work with, the truth is, the current market is not ideal for you.
You might face what are known as ”sequence of return risk” if you must sell depressed share holdings to fund your current spending needs. Essentially, selling shares at a loss early in retirement inflicts a double-whammy on your portfolio’s future growth potential.
As you know, we work with each and every one of you to make sure you have sufficient money in easily-realisable assets to cover five years’ worth of expenditure to avoid the need to sell your investments in exactly these situations.
Detailed withdrawal strategies for managing sequence risk is beyond the scope of this article. But best practices do exist and we deploy them. This is one critical reason we are glad to be here as your adviser, to help you weigh the challenges and possibilities ahead of you and proceed in an informed manner.
We Are (Still) Here!
To reiterate: We remain here to support you, so you can best support yourself and your loved ones during these challenging times. We and our partners are well prepared to conduct business online, as you may have already experienced. The Virtual Retirement Café coffee mornings we are holding on Fridays at 11am are a great example of how we’re harnessing technology to be here for you. Please continue to lean on us for both routine requests as well as specialised demands driven by the current crunch.
Of course, your unique circumstances will influence the financial choices we’ll be advising you to make in the months ahead. But again, your most rational move is to stick with the robust plan you’ve already got in place. Update it only when your life’s circumstances call for a change.