COVID-19, or the Coronavirus, is certainly instilling panic in many people around the world and we’re really seeing the impact of this panic.
The stock market is taking a hit, as is tourism. Schools are talking about closing, as are borders of some countries. Specialised hospitals are being built in ten days to cope with the demand in China while hospitals around the rest of the world are being inundated with people getting their sniffles checked “just in case”. Let’s not even mention the crazy stockpiling of toilet paper, cleaning products and non-perishable foods!
But what does all this panic mean for the safety and security of your investments?
The first, and most important thing is to have a plan for when there are crashes. Because the facts are that just like there are huge gains to be made from investing, there are also risks of losses.
Over the last century, the Australian Stock Market has crashed, on average, once every 10 years. Yet, despite these crashes, if you had invested $1 in 1900, it would now be worth around $2,429,500 today if you’d ridden out the highs and lows.
These crashes can be crushing if you’re involved, but it’s your response that determines your recovery.
The GFC resulted in many Australian investors converting to cash and feeling secure in their returns of 6% in a term deposit, yet the market rebounded 36% between March and December the following year.
Every crash is followed by a recovery.
We just need to make sure that the crash doesn’t cripple you and that you have your investment structured so you can weather the storm.
If you don’t have a plan or you’re worried about your investments and your financial security right now, please call or email. We can discuss your options so you can make decisions on sound, rational advice.