Your Investment Questions
With so many people concerned about their investments and wondering what they should be doing, we've put together some responses to your most frequently asked questions.
What should I be doing with my investments?
If your risk profile is correct then at this point a rebalance may increase your equities exposure. We are still at an early stage in the COVID-19 experience and at this point increasing equity exposure may not be optimal. In which case, and assuming you are comfortable with your risk profile and the recommended asset allocation, continuing to allow your portfolio managers and asset allocation to operate as they always have may be the better option. It may help to remember that this volatility, as unpleasant as if feels, has been incorporated into the selection of your respective risk profile.
Should I take action or should I ride it out?
Again, as above, if your risk profile and the resulting portfolio is correct for you then staying the course in the absence of perfect foresight is the proven path. This doesn’t mean that it will necessarily be the most comfortable but over the longer term staying the course has proven to be the appropriate course. We do not know what will happen from here - government stimulus and central bank intervention have steadied financial markets, the world is well and truly focused on the task at hand and while it may get worse before it gets better, there is little doubt that globally we are fighting COVID-19 with everything we have. We will win this war but we may not win all the battles from here on out and there will be setbacks.
Is it better to sell my investments so they don’t go down to $0?
The short answer is no, and that assumes you own good quality assets and/or have employed skilled folks to look after this on your behalf. Good quality investments will not go to zero - they may fall in price and the earnings and consequently dividend and distribution payments may fall a bit but they will survive. Good businesses and assets going into this will be good business and assets coming out of this. Some will fare better than others and COVID-19 will change the investing landscape and opportunity set. Skilled managers recognise this and take action to avoid those business that will struggle and seek exposure to those that will thrive.
What does the future hold?
We understand and share with you how difficult and surreal things are at the moment, but life will return to ‘normal’ at some point. Markets have corrected and economies have faltered but have always recovered, though not always in the same form they entered the respective crisis. Our focus is to be alive to how COVID-19 is changing and this will position us well for what comes next.
Remember, you are not alone and we are all here together. If we can do something to assist you please call on us.