Top 10 tips in times of market chaos

Learnings from over a decade of working with Financial Planners and talking to their clients. Some thoughts for coaching clients and deeper client conversations.

  1. Having a long-term (until you are 100+) Financial Plan means you have income, expenditure, emergency fund and short-term savings sorted before you embark on taking too much investment risk.
  2. Decisions about investing are therefore based on the risk you can afford and are prepared to take.
  3. Your short-term liquidity and medium-term requirements are catered for, therefore investing becomes something you can afford to set aside for your future needs.
  4. Decisions about the amount you have available to invest are based on the risk you can afford to take and the risk you are prepared to take.
  5. When investing you should not try and play the market, you should follow a systematic, globally diversified, low cost method of investing to give you the best chance of a successful investment outcome.
  6. Market falls only turn into losses if you sell out too soon. Where some assets fall, others will rise. Hence the need for diversification of asset classes and geographies in your portfolio. Invest in the whole market, not one current overperforming part.
  7. Low costs are achieved by not stockpicking and selling and buying too often. Watch out for management fees.
  8. With a globally diversified, long term approach, you can see that ‘whole market’ investments rise over the longer-term horizons and the impact of current affairs such as elections and viruses become small rectifiable blips over several decades of sticking with the programme.
  9. News these days is easy access, widespread, sensational and just ‘click-bait’.
  10. Human behaviour (panic) is the biggest eroder of long-term wealth. If you have a long-term strategy, stick to it. If you do not have a long-term strategy, find someone who will help you create one. You may live until you are 150. The average retirement date is less than half of that.

Correct me if I’m wrong. I can’t wait to hear from you …