Written by Tom Stanley, Investment Adviser, 26 January 2022
After my musings last month on ‘what is the downside’ found here, there have been some unsettling headlines:
- US company earnings have stumbled.
- S&P and Nasdaq stock indices suffered their worst week since the COVID-19 pandemic began, tumbling -5.7% and 7.55% respectively last week.
- US inflation has hit a 39 year high at 7.1%.
- NZ’s Q4 CPI inflation figures are out on Thursday, and expected to hit 6.2%.
- The Era of ‘cheap money’ is supposedly over.
|Not to mention many of our NZ summer plans have been disrupted by Omicron and a move to ‘RED’ per the current COVID-19 traffic light system. |
How do the above headlines and events make you feel? Uncomfortable?
Fair enough, that is only natural – but, let’s take some perspective – above are the exact sort of headlines we need to see through as long term investors. As I write, US stocks are bouncing back, but volatility continues to be seen across Asia Pacific markets.
It can be tough to see through all this noise if you don’t have a clear plan, or guidance along the way. Fortunately, making plans and providing guidance/advice is what we do – the team at Good Returns pointed out our recent work with an article on how we are delivering personalised advice to our KiwiSaver clients and at scale.
So the question I want to ask you this month is – What are your investment goals for 2022 and beyond?
Personally, I have my loving family and a home with my wife, so the next milestone I am working toward is retirement, and that is quite a few years off (decades). Knowing my view is longer-term, I can read the above headlines, remain composed, maintain my exposure to growth assets, and give myself the best chance of hitting my retirement goals.
But while technology has made it easier for us to provide prudent and compliant advice at scale, it has also made it easier than ever to come unstuck ‘responding’ to headlines and volatility. With Omicron, many markets in a ‘correction’, and work from home re-emerging for some in NZ, now is a good time to revisit an FMA & PWC paper from 2021 that examined how KiwiSaver members responded as the pandemic emerged in March/April 2020. The report lands some jaw dropping stats:
‘March 2020 saw 6.4x the amount of fund switches compared to March 2019.’
‘70.5% of switches during the COVID-19 market weakness were to a lower risk fund’
And the most damning stat:
“only 9.1 per cent of people who switched to a lower risk fund during COVID-19 switched back to a higher risk fund by August 2020 – meaning 90.9 per cent effectively locked down their losses from that time”
As your adviser, we want to put technology to work as a force for good. By understanding your goals, we can help you exhibit discipline as an investor, and see through the noise of everyday headlines and volatility.
Before you ‘respond’ to headlines, please give us a call or jump into our free online KiwiSaver fact find here.
Also, if you have friends or family that you think could do with some KiwiSaver or Investment advice, please feel free to share this email and point them to the above link – there is no additional cost, we will review their situation, and be in touch.
Thanks for reading reading, stay safe and remember – We are here to help. If you have any questions or queries, contact Amicus today.