Metis AM
In recent months, the pandemic has changed many aspects of our daily lives, from wearing a face mask to remote working. However, one of the biggest ways that the virus has affected people is by forcing them to reassess their long-term goals.
For example, a study published by FTAdviser showed that the pandemic has made a large number of Brits change their retirement plans. With the economic uncertainty that it has caused, it’s understandable why people may feel the need to rethink their life goals.
Of course, while you might think this is a necessary evil, it doesn’t have to be. If you want to gain more confidence that you can reach your goals despite disruptions, you may benefit from seeking professional advice. Read on to find out how working with a planner can help you.
The pandemic has made many people more averse to risk when investing
As you may know, the coronavirus pandemic and subsequent national lockdowns have had a significant impact on the UK economy.
According to figures from the Office for National Statistics (ONS), published in the Guardian, the UK’s GDP fell by 9.9% in 2020. The serious economic disruption caused by the national lockdowns meant that many assets fell in value and many global stock markets experienced significant volatility.
Thankfully, the UK experienced strong economic growth in 2021 as businesses began to adapt to the “new normal”. That being said, the sudden shock also had an understandable psychological impact on many people.
For example, a recent study published in FTAdviser showed that more than half of young investors have become more averse to risk.
This is obviously concerning, as being too cautious with your money can mean that it isn’t able to grow in the most effective way. If you want to ensure that you can reach your financial goals, seeking professional advice can help.
A planner can help you to build a resilient and diversified portfolio
One of the main ways that working with a planner can help you is that they can help you to properly diversify your portfolio. This essentially involves not putting all your eggs into one basket and can help to make your finances more resilient to economic shocks.
Diversification typically involves holding a variety of investments from a range of different asset classes, economic sectors, and geographical areas. For example, a diverse portfolio may include:
- Stocks and shares
- Corporate bonds
- Government bonds (Gilts)
- Real estate holdings
- Cash
The main benefit of doing this is that you can reduce your exposure to risk when a financial disruption, such as market volatility, occurs. Having a diverse portfolio means that only a portion of your total wealth may be affected and growth in other areas may balance out the fall.
Cashflow modelling can help you to see whether you’re on track to meet your goals
One of the most important tools that a financial planner has at their disposal to help you successfully manage your wealth is cashflow modelling software. This can help you in several ways.
While nobody can accurately predict the future, it is possible to make an educated guess and cashflow modelling helps you to do exactly that.
The first step of the process is to get a clear picture of what your financial goals are. This is important so that your planner can predict how your income and expenditure are likely to change over time. For example, you may want to enjoy an early retirement at 55.
The next step is then to assess the value of the assets you hold. This may include your investments, pensions, and cash savings. With this information, your planner can then work out how much you’re likely to need to reach your goals.
Having this accurate picture can be beneficial as it can help you to plan ahead. For example, if the model shows that you may not have enough wealth to retire early, you may want to alter your investing strategy or increase your pension contributions.
Working with a financial planner can help to give you greater confidence that you’re on track to reach your goals, no matter what disruptions you may experience.
Get in touch
If the pandemic has made you worry about your finances and you think you may benefit from seeking professional advice, we can help. Please email enquiries@metiswealth.co.uk or call 0345 450 5670.
Please note:
The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance. Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.
