Do I need to change my investments because of the Coronavirus?


31-01-2020
Carl Richards explains succinctly what can go wrong with buy and sell decisions outside of a long-term financial plan.

Jeremy Edwards of Cambridge Independent Financial Advice firm Martin-Redman Partners, talks about how the coronavirus could affect your investments and pensions, with a focus on the effect of emotionally-driven 'buy and sell' decisions on your investments outside of a long-term financial plan.

As a business that provides investment management advice to clients, the recent news and comment about the Coronavirus caught our attention, especially so its likely impact on the global economy.

Typical offerings include this one from the BBC and this from the Express. Reports of the Chinese authorities closing off cities and airlines suspending flights have now got the financial world speculating about a potential global downturn triggered by a reduction in Chinese manufacturing output and  trade.

If you are an individual who trades daily in Asian stocks and shares, the likely blip in output, trade and stock market values is a real and present danger, so a regionally centred sell off is a distinct possibility.

For a client with professional independent financial advice from an IFA’s like ourselves, the advice is much more measured as we are not chasing day-trading returns or time scales. Experience suggests that chasing the news cycle is an exercise in futility, as you will buy and sell in exactly the wrong places.

I was lucky enough to attend a seminar where Carl Richards, (USA based Certified Financial Planner, blogger and New York Times columnist), was the guest speaker and he provided the diagram above.

This explains succinctly what can go wrong with buy and sell decisions outside of a long-term financial plan.

So what do you need to consider when investing?

  1. Invest for five years plus
    The minimum professionally advised investment time horizon is around five years, so the news cycle of 24 hours is less relevant than typical economic cycles that seem to be around 15-22 years.

     
  2. Ensure your investments are diverisifed across several asset classes, sectors and geographic areas
    For the personal investor, stability of holdings and diversity are the keys for sustained returns and value for money.

     
  3. It is time in the market, not timing the market
    No-one can accurately time when the markets will peak at their highest, or fall to their lowest. Much of the cost of investing is the transactional costs for buying and selling, so minimising “Churn” will make the best of gains made by being in the market. Sometimes, doing nothing is better than doing something for the sake of it

Arrange a meeting to discuss your investment planning
Please get in touch with us to arrange an introductory meeting, at our cost. We have both male and female Independent Financial Advisers who are based in Cambridge, Grantham, Bury St Edmunds and the surrounding areas.

Contact: info@martin-redmanpartners.co.uk or call us on 01223 792 196.

About Martin-Redman Partners  

We are a team of experienced Independent Financial Advisers (IFAs) who can advise on your personal or business financial arrangements. We have been building trusted relationships with clients for many years by articulating clear and tailored recommendations in areas such as investment advice (including ISAs, Unit Trusts, Investment Bonds, EIS / VCTs) to retirement planning (including Personal Pensions, SIPPS, Directors Pensions), to complex estate planning advice. 

We offer expert independent financial advice throughout Cambridge, Cambridgeshire, Leicestershire, Suffolk, East Anglia and the South East.  Many of our clients are within or are in the surrounding areas of Cambridge, Grantham, Stamford, Bury St Edmunds, Frinton on Sea, Ely, Peterborough, Huntingdon, Cambourne, Newmarket, Soham and Oundle.

The information contained is for guidance only and does not constitute financial advice. It is based on our understanding of UK legislation, whether proposed or in force, and market practice at the time of writing. Levels, bases and reliefs from taxation may be subject to change. Accordingly, no responsibility can be assumed by Martin-Redman Partners its officers or employees, for any loss in connection with the content hereof and any such action or inaction. 

 

We provide independent financial advice on investments, pensions, inheritance tax planning and protection. We work with private individuals, businesses and professional introducers, such as accountants and solicitors, to ensure our clients financial advice needs are met.

Martin-Redman Partners