What should investors do?
It is almost impossible to predict how the markets will react or recover during this pandemic. The following are a few principles that investors can follow during this time:
Stick to your plan
Your financial plan should be developed to consider your personal objectives and your risk profile. It is important to review your plan to ensure this still aligns to your objectives. However, be wary of changing your “money personality” due to the noise and the crisis, your risk profile should remain intact during both bull and bear markets.
Let the professional money managers do their job
A diversified investment portfolio should include several investment managers and investment mandates aligned to your risk profile. The investment managers will align the underlying portfolio to the current market conditions and increase or decrease the equity exposure within the parameters of the mandates to mange your portfolio and risk on your behalf.
Now is the time to be frugal
If you have not made provision for an emergency fund, now is the time to be cautious, save on luxuries and where possible build up a buffer or emergency fund. Given the continued uncertainty it is important to diligently manage expenses and increase the allocation to your emergency fund. It is now more prudent to be conservative with your finances than to overextend during these times of uncertainty.
The Covid-19 market crash is a shock, and we are all concerned about how this virus will be contained. From a financial perspective, it is important to remind ourselves that this is not the first crash we have seen, and certainly won’t be the last crash that most investors will experience.
A well-structured financial plan, implemented through a diversified portfolio, will assist in delivering on investors long-term objectives through difficult markets.
Contact one of our advisors for more information.
Phone: 011 803 9686
Email: vivian@pbafsa.co.za