Coronavirus: What should we do with our investments?
As we are all aware, the coronavirus is causing huge challenges now for many globally. The impacts are nowhere near clear and probably won’t be for weeks if not months.
Global investment markets including Australia have become more volatile as a result of this. Therefore, some of you may be asking: “What should we do?”
Where to start?
The best place to start is working with what we do know.
- The evidence suggests that timing markets is nearly impossible,
- Markets have always and will always be volatile (nature of the beast),
- Trading investments incurs costs (buy/sell spreads, brokerage and can certainly trigger Capital Gains Taxes), and
- If you have a solid Investment philosophy you will be broadly diversified with an APPROPRIATE Strategic Asset Allocation (aka Pie Chart) that as long as you stay invested, your money will bounce back out of the troubled times.
Greed drives the decision to sell at this point in time. I believe the greed stems from 2 potential choices:
- You have had an Asset Allocation that is TOO aggressive for you and you wanted the upside, but not willing to take the downside, OR
- You are gambling and trying to time the market to beat the market when the Empirical Evidence strongly suggests that even the world’s best investors can’t do this.
Yes, there is uncertainty in the markets, but we never actually have certainty even in the best times. If you have that strong Investment Philosophy that has an appropriate Asset Allocation and is broadly diversified within the different areas of your Asset Allocation you have nothing to fear long term.
If you are under 50 and have money going in to your Super fund, you will have enough time to ride a downturn out. If you are over 50 and/or retired, it is likely you have a far more defensive Asset Allocation which will help you survive these turbulent times as well.
If you want some help through these turbulent times, please reach out whether you are an existing client or a new client. We are here to help you manage these events.
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