We recently had a letter from our Independent Financial Advisors where they commented on the way the markets have reacted to the Coronavirus outbreak.
The letter spoke of markets around the world being gripped by fear and also greed. They remarked on the $2.1 trillion being wiped off the stock market. I take this as people being fearful of their wealth being quickly eroded in response to the sudden economic downturn. Some people may see the current calamity as a chance to cash in, to take advantage of the big sell-off around the world through buying stock at low prices.
That’s where greed comes in. Sure, a canny investor will have cash waiting so quick moves can be made when the opportunity crops up for a bit of speculation. In the past that has led to serious money being made and people becoming amazing philanthropists, or perhaps greedy, selfish people who are never really satisfied.
For us, these days we prefer taking the cautious line advocated by the advisors – sit tight, hold our nerve, don’t be fazed by this volatility and ride it out.
And then I reflect on our needs and where we are. Our modest investments are all varied. Risk is in proportion to the likely gains and what we actually need. There are the three investment pots of money there – the short term, medium and long term investments. The latter has time to sort itself out – we don’t plan on cashing any of that in during the short term. Short and medium term needs to be on safer ground, at least that’s what our strategy says.
Our other assets are steady. Occupational pensions aren’t fixed to the markets; thankfully they will pay out regardless. Our house is our home and we’re not regarding it as an asset to cash in at any point; we will always need somewhere to live.
So perhaps in years gone by I would have looked at investing money in a slump. Now I feel more relaxed, sanguine and “mellow” about it – I am more aware of how “well provided for” we are. We aren’t multi-millionaires, we don’t want to be, we are content. Playing the markets is perhaps like gambling; but is this right? Does it really pay off? In the long run, doubt it.
Instead we should be putting our hopes in a wiser, more secure things? Maybe contentment and keeping these earthly things in perspective is the best bet in the long run?