Coronavirus – Keeping things in perspective

Investment Strategy – delivering income


Many folks are taking withdrawals from investments to provide income. I would like to explain how we will manage this going forward. If you are not taking withdrawals this is still relevant but for the future. Most portfolios are divided between stocks and shares (growth funds) and bonds (defensive funds). The typical blend is 60/40 but your portfolio may be different.  Previously, if the income from the portfolio doesn’t match the required withdrawal, we sell down investments in proportion across all funds. Investment markets have dropped over the last month and it is the stocks and shares element that has been affected. The defensive part has held up.  The next review is in May, we do it every four months. When we do the review, we will take the required cash from the Bonds (defensive) element. This ensures that we are not selling shares in a falling market. This is a simple semi-automated system that protects the portfolio value and ensures that you stay in the best position to benefit when markets start to grow again.


If you have cash reserves held elsewhere and can defer the withdrawals at least for a period this is worth doing.


Investment Future


The Government are doing all in their power to manage the situation the country finds itself in. However, there are many folks out there putting their two-penny worth in and making their views sound very plausible.


We are in unprecedented times, but we have had crises before which at the time we would have been described as unprecedented. I am not belittling the situation we are in, but I am saying we have been here before and we must recognise what works and what doesn’t work. From an investment perspective, we must hold on to investment principles. We must resist being influenced by the opinions of others no matter how convincing and regardless of how well argued their opinion is. Focus on facts, and don’t get distracted. And the facts are that we do not know how this will play out. But we do know that capital markets reward investors over time. It is not always an easy ride, but that has proved to be the outcome of all past crises. Although it is appropriate and reasonable that you may worry about the human cost and the pressure that some families are facing, try not to worry about your financial position because you don’t need to.


General Support


I have had many emails from folk seeking to just talk through their own situation. All the emails start with “I am sure you are very busy, so when you have a moment…” No, No, No. If there is anything that you wish to talk through please email and then I will ring back. Yes, ring back, this is not email territory. I am really keen to support you in the position you are in.


Reassuring you on all aspects.