AGENDA
FINANCIAL HEALTH
BY RAJ SHAH, DIRECTOR AND PRINCIPAL OF BLUE WEALTH CAPITAL The financial planner shares some important mantras for tricky times
OPTIMISM IS THE
ONLY REALISM (AND THE £400K CAMERA IN YOUR POCKET!)
CRISIS DU JOUR Generally speaking – ignoring the ongoing, interminable COVID-19 crisis, of course (which will come to an end one day soon) – it’s a pretty safe guess to say that your biggest worry today may not be the same as yesterday, or last week. Crises come and go, and thankfully so. When the ‘crisis du jour’ vanishes, to be replaced by the piece de resistance of tomorrow, we tend to breathe a sigh of relief and pat ourselves on the back for putting another nightmare behind us. Until the next one
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happens, of course, when we panic all over again. It has been widely reported that the eventual ‘crash’ of the global stock market in March 2020 was caused by widespread panic among investors about the impact of the COVID-19 pandemic. This saw circa £100 billion moved from equities into cash (JP Morgan Guide to the Markets Dec 2020). People panicked and didn’t stick to their plans. Periods of extreme turbulence – not just in the financial markets, but life generally – call for calm, clear thinking. It is important to
remember that a crisis is not always a disaster or an emergency. A crisis is broader than an emergency (an urgent action) or disaster (a calamitous event). The Oxford English Dictionary defines a crisis as 1. A time of severe difficulty or danger 2. A time where an important or difficult decision must be made. Most formal definitions of a crisis include the words: turning point, crucial time, and decision.
BE PREPARED When there is turbulence in the markets, the value of a
good adviser really comes into play. Vanguard (the world’s second largest fund manager, with circa £5 trillion under management) asked me to write an article for them on the importance of behavioural coaching and how we deliver it to our clients. (Vanguard Advisor Stories, Nov 2018). We not only prepare the plan, we rehearse the plan with you (as many times as it takes to get you comfortable with the reasons for sticking to the plan) and execute the plan (diversification of funds and, of vital importance, faithfully staying the course) by ensuring
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