11 March 2020

‘The value of investments may go up as well as down’ – a disclaimer you could recite from memory, yet the idea of risk is still not particularly understood by many investors. In fact, unless you are of the older investment generation (who remembers Black Monday or the 2002 Dotcom Bubble Burst?) the recent drop of the FTSE-100, caused by the spread of coronavirus, may have been a worrying reality check.

The truth is that no one can predict how the current state of affairs will progress, (if we could then we’d be millionaires!) The only certainty is that the market depression looks set to remain for the foreseeable whilst the impact of the virus on China is felt in supply chains around the world.

Don’t panic! Hopefully your investments have been made with a long-term goal in mind, spanning years (ideally at least three to five) rather than months; allowing for any losses now to be recouped over the time. After all, investors who saw markets crash by 30% in the 2008/9 financial crash saw a 30% rise in the following months.

Keep Calm and Carry On! If you have a payment plan in place, or even a payment routine – carry on! By continuing to invest regularly you will be buying investment units at different prices every time and getting more for your money than you previously have been, this is known as pound cost-averaging.

Lessons Learned… Hindsight is a wonderful thing and we are now, in many ways, at the mercy of the virus. An important lesson to take from this experience is to not become complacent about investments. By keeping an eye on the markets, or engaging regular professional advice, future issues could at least be managed or the impact minimalised by acting quickly.