Companies have been forced to cut and cancel dividends, with many concerned that they may even go out of business altogether. However, you can still take action to protect your finances, savings, and investments as far as possible. In this article, we look at some of the steps you can take to prepare for a better financial future in the wake of the coronavirus pandemic.
Long term investor? Wait it out.
If your investment plan is for longer than five years, you may want to wait out the storm. For long-term investments such as property, this slump may just be a blip in your overall investment strategy and portfolio history. If you sell your assets now, you will be taking a hit on those losses and missing out on the eventual upswing. Don’t panic sell.
Review your financial and investment goals
If you feel anxious about your investments, even just your home, you may be itching to do something. If you think you need to take action, use this opportunity to review your goals. Re-establish why you have invested in the ways you have, look at your savings and understand what your long-term strategy is. You can then get a clearer view of what you may be able to do to achieve your goals in the longer term. A quick win is to ensure you are using a stocks and shares ISA to take advantage of the tax benefits and look at the associated fees. Is there a cheaper option?
Diversify your investment portfolio
Don’t keep all your eggs in one basket; now is the time to diversify. If you hold shares, spread your investment across several industries. You may wish to invest in different types of assets too. You should consider ‘capital preservation’ - that is, investing in the assets that perform in uncertain times. Such assets include gold, absolute return funds, and gilts (government bonds). Absolute return funds aim to perform even in adverse circumstances, and while they may not provide the same returns as a fast-growing tech company, they can help to preserve your capital through the storm.
Accept the volatile nature of investing.
In times like these, it is essential to remind yourself that volatility is just part of the investment lifecycle. While some market conditions are predictable, many, including a global pandemic, are not. However, the way in which you react to the change in market conditions is within your control. Seeking wealth management advice can help you to manage your investments at this challenging time.
This article aims to supply general information, but it is not intended to constitute advice. Every effort is made to ensure that the law referred to is correct at the date of publication and to avoid any statement which may mislead. However, no duty of care is assumed to any person and no liability is accepted for any omission or inaccuracy. Always seek our specific advice.
