We’ve spoken before about the need to look at medium- and long-term investment cycles when considering your own savings plans, but current market turbulence can create nervousness when looking at your position.
I’ve been in the finance industry for many years, and I’ve seen several of these cycles come and go, and one thing I know is that markets always self-correct over time. The current volatility we are seeing seems to be global — and there is a general resettling needed after the upheaval of the pandemic and geopolitical events such as the Ukraine war. All these factors have combined to create energy price spikes with subsequent knock-on effects on other businesses. You may look at the combination of rising food prices and high inflation and decide to exit your existing savings or investments to keep your cash “under the bed.”
Of course, you need to make the right choices for you about how you manage your savings and investments — and it’s vital that you work with your financial adviser to build the right roadmap for your future goals. A crucial part of this is ensuring that whoever is helping you with your financial planning has clear visibility of your timelines and what you hope to achieve in the future. What are your short-, medium-, and long-term goals? Are you saving for your retirement (long term) or to give yourself some options when you decide to leave yachting (short or medium term)? How quickly are you likely to need access to your funds, or are you happy to keep them invested over a longer period (for example, 5 to 10 years or more)?
We’re advising all our clients, if possible, to stay the course right now on their medium- and long-term investment plans and keep their eye on the future. Inflation rates globally are already starting to drop, and the time to buy stocks and shares is always at the bottom — taking advantage of low prices to bolster your portfolio with key growth opportunities. But alongside high inflation rates, we’re also seeing higher interest rates as global economies attempt to steady the ship — and this presents additional opportunities for your shorter-term savings goals.
Volatility can bring opportunity, so make sure you talk to your financial adviser about aligning your savings and investments with your goals to ensure you successfully can ride the waves of market turbulence.
This article was originally published in the June 2023 issue of Dockwalk.