The Sharemarket and the Corona Virus – What to do now?

March 13, 2020 5:49 am

Hi all,

I hope you are all well, considering the current events occurring globally from a health and investment market perspective.

I’d like to start by saying that it’s perfectly fine and normal to be experiencing fear, anxiety, and feelings of uncertainty when we see and hear what is happening globally in the world. This is an event that will be marked in history and I’d be concerned if you weren’t affected to some degree! However, it’s not OK to react to what’s happening by making a decision, based on our emotions, that could affect us for a long time after these events have passed.

In no way do I wish to trivialise what is happening or your feelings toward it, and with this in mind I’d like to make the following points:

  • If your personal circumstances, plans, and goals haven’t changed, neither should your investment strategy.
  • The people who sell their investments during times like these, end up being the characters in the horror stories of the share market we often refer to when we look back at events like this. People who sold their investments when the GFC was at its worst/scariest, have never got their money back, whilst those who hung in there are in a better financial position now. Over time, investor returns (i.e. the actual returns an investor receives) under-perform investment market returns because of their behavior. Trying to exit the market at the right time and get back in at the right time takes more luck than skill! What is happening now, may provide one of the best wealth-building opportunities for those whose circumstances provide for it. For every buying decision we face, we all are happier when the price goes down – so why do some change the rules when it comes to the sharemarket?
  • For those who are receiving/making superannuation contributions and others of you making regular contributions to your investments, your are effectively receiving a discount on your purchases, e.g. what was costing $1.00 is now costing 70c, meaning that you are getting more petrol in the tank, more ‘bang for your buck’, more seeds to grow a bigger investment crop! (the numbers are illustrative and not meant to accurately represent the actual market drop). We get the best returns from the investments made at the worst times (i.e, when prices are low), provided you give it the time it needs to recover and grow.
  • For those who are not in a position to add more to your investment and those drawing a pension from your super, staying the course, unless your circumstances have significantly changed, is still the wisest course of action. For the latter, keep in mind that you are only drawing a relatively small percentage of your investment to fund your retirement income and that the bulk of your capital remains to recover over time.

Please feel free to contact me to discuss your concerns and/or the opportunity that is unfolding, in light of your personal situation and circumstances.

Kind regards,