Desperate times shouldn’t mean desperate measures

When our lives are disrupted, desperation can make its way into our thought process. While this is a perfectly normal behaviour pattern, it’s not the route to guaranteed success, particularly where our money is concerned.

ROUSE LTD By Ben Rouse

The shrinking of the UK economy and the volatility of the markets have made headlines, which has undoubtedly increased our collective anxiety about the effect of COVID-19 and how it will all be resolved – particularly regarding our jobs and incomes and how to ensure we survive the storm. As we take those tentative steps towards re-engaging with the world, it’s important to remain calm and not let panic take over, even if there are missteps along the way. It might well be tempting to look at market volatility and think all it takes is buying in when prices are low. But the risk to investors who are not advised is huge: if your money is tight now and you’re thinking you might ‘play’ the market to help boost your coffers, then it’s almost odds-on you’ll lose. It’s simply impossible to successfully second-guess, or ‘time’ the market. The parallel between gambling and investing is often made but, as we’ve explained, there are actually huge differences. Individuals jumping into volatile markets at times such as this is an example of when ‘investing’ gets put in the ‘gambling’ column. This is a world away from those investors who have taken qualified advice and a long-term view of their money management.

A key finding in a 2018 survey by Legg Mason Global Investment was that ‘combining their own personal knowledge with professional advice gives investors a significant advantage’.

The 2018 Legg Mason survey was conducted between July and August and across 17 countries and involved 16,810 investors. It also found that advised investors have clear long-term goals because they have a financial plan that reflects their attitude to risk. Planning helps ensure they stay invested through volatile periods rather than being frightened out of their investments as a result of short-term market turbulence. As well as giving the investor confidence in their approach, a qualified financial planner can help an investor see the wider picture. Being given the tools to take a measured approach means an advised investor is better able to remove emotion from their investment decisions and are therefore more likely to stay on track to reach their investment goals. These are very strange times so it’s more important than ever to take a calm approach to decisions regarding your money. This will pass – and we’re with you every step of the way.