Amid further market turbulence caused by the latest political news, it pays for investors to be investing as part of a more coherent, purpose driven and joined up Financial Planning strategy over the longer term, rather than a short term “knee-jerk” reactive approach which follows no longer term plan.
“Since records began it seems that, regardless of the outcome of an election at any given moment, markets pre-empt the expected outcome of said battle for votes and then react to the results – one way or the other(sometimes in the extreme) – and there then follows a gestation period after which further news (good or bad) prompts another extreme and opposite reaction (either one way or the other!). Eventually markets find their new equilibrium before “flipping out” at the next bit of news….” …. the thoughts of at least a few investors as they hold their hands up in dismay at yet another market “blip”.
But whilst we will admit to the fact that we have all been warned “….the value of investments and any income derived from them can go down as well as up and you may not get back your original investment….” , it offers little comfort to those investors who have rather more investment eggs in one basket than perhaps hindsight or wisdom or even gut feeling would have liked.
The newspapers today feature a number of headlines including coverage of the (adverse) Market reactions to growing fears that Greece will leave the euro and trigger a fresh crisis. The FTSE 100 slid 1.8pc to close at its lowest level this year – 5,554 – following the Greek rejection of the austerity measures that are a condition of its two bail-outs (€219bn). European markets followed suit. The eurozone’s relative stability ended over the weekend as Francois Hollande was victorious in the French presidential election on an anti-austerity ticket and Greece had a hung parliament.
This is bad news for investors who rely on the day to day value of their investments in order to meet short term financial needs. However, investing in volatile markets for very short term financial needs is not really the ideal way to treat your investments nor to design your investment strategy.
Here at SewellBrydenGunn (SBG), we have long been advocates of Life and Lifestyle linked Financial Planning (Good Financial Planning). But at SBG we go a whole step further. We believe that really Good Financial Planning is underpinned by one very important foundation – the real “here and now” rolling need to balance today’s short term financial requirements with a Purpose Driven approach to developing tomorrow’s longer term capital requirements and strategies for investing for Financial Independence.
Many investors still invest “without purpose” (this includes pensions, bonds, mortgage repayment plans, offshore bonds, other offshore plans, executive share schemes and options packages, trusts and IHT schemes and so on). So their investments end up drifting off course unchecked, into “uncharted waters”, into unexpectedly volatile or tax heavy conditions and without warning can become more of a headache than originally bargained for. In addition, without purpose, reasons not to spend today’s hard won capital (at whatever level) become blurred – the urgent calling of the “here and now” drowns out the potentially more important callings from tomorrows capital needs.
At SewellBrydenGunn – the Goal or Purpose Driven approach helps clients periodically take time out to focus on their life’s priorities both now and in the future. Making sure that overall investment pension and retirement strategies – as well as short term expenditure needs – reflect Purpose, above everything else, is a key area that is given due focus within the Purpose Driven Financial Plan (TM).
So when the Markets flip, blip or slip in response to the latest news (good or bad), instead of holding their hands up in dismay, a better prepared investor will hopefully be able to say – “ah yes – I have that covered and planned for…”.
For more information about Financial Planning through volatile times and the Purpose Driven Financial Plan (TM) or to arrange an initial meeting or discussion, please do not hesitate to contact us on 01276 471083.
Photo Credits: DoT UK, SBG PressRoom and Emily K