Community Expert: Finance Cutting Out The Noise
by Claritas Wealth Management
At the time I’m writing this blog it feels like there are multiple seismic world events happening at roughly the same time.
Turmoil in Iraq, the President of Venezuela forcibly removed by the US, rhetoric from the US regarding Greenland, the ongoing Russia/Ukraine conflict and the troubles in Gaza.
There are obviously many more but these are the headlines dominating the news at the moment.
Where does this leave people trying to plan their financial futures?
The temptation is to focus on current world events and let that influence decisions that can have a lasting impact on your long term wealth.
World events may make you reluctant to invest and leave surplus funds in cash accounts that over the long term are likely to lose money relative to inflation. It might feel like a stock market downturn is inevitable bearing in mind everything that‘s going on at the moment.
The truth is that no-one knows but let’s focus on what we do know.
Stock market downturns do occur every so often. There’s no real pattern to it and there’s no reliable way of predicting them in advance in order to gain some kind of an advantage, i.e. coming out of the market at the right time and then re-entering.
In the long run, the stock market has been an incredible source of wealth generation and there’s no reason why it shouldn’t continue to do so in the future. Caveat – in the long run and with bumps in the road along the way. It’s how it has always been and how it always will be.
It’s really important to ignore the ‘noise’ of current world events when it comes to your own financial planning.
Focus on how much money you need to live a fulfilling life and when you are going to need it. This then informs how much should be retained in cash or other defensive assets. The rest can be in longer term stock market related assets and, because you know that you don’t need this money any time soon, you can relax around any short term fluctuations.
This is where an adviser can really help, firstly in the construction of the initial plan and, even more importantly, helping you stick to it when current world events cause you to have a bit of a wobble. You’re a human being and this is all completely normal. We can help.
