Coronavirus – and the markets’ volatility

With billions being wiped off the stock market due to the coronavirus pandemic, it’s hard for investors not to panic. Markets are exceptionally volatile, despite measures taken by central banks around the world, including the Bank of England, to try and reduce the impact of the outbreak.

There are, however, a few key principles to bear in mind with regards to your long term investments:

1. Stay invested

The main advice is to hold your nerve. Don’t get distracted by all the ‘noise’ of the markets lurching up and down. If, for example, you see the market jump up 700 points, only to witness it lose 1200 points and then gain another 600 points in the course of a week or even a day, you know emotion has taken over from all rational thought. In such circumstances, it’s better to wait until things calm down, no matter how long that may be.

It would be impossible to predict the bottom of the dip so it’s better to keep your money invested. Or else, by taking your funds out, you could risk being out of the market on the very days it recovers and does well.

2. Think long term

The coronavirus situation is without doubt unprecedented, fast moving and deeply concerning. Yet although we might not have experienced anything like it in our lifetime, the stock market has faced many crises before and recovered. In the last 30 years alone the market has gone through the early 1990s recession and Gulf War, Black Wednesday, the dot-com bubble, the September 11 attacks, the financial crisis of 2007/08 and the European sovereign debt crisis. So while in the short term your investments are likely to be affected, anyone investing in the stock market knows they should be thinking about a five to ten year period. Coronavirus will continue to unsettle the markets but volatility will always be a part of investing.

3. Work with an advisor

It can help to talk with an experienced financial planner who can put market selloffs in perspective and discuss your concerns.

Appointing a professional to watch over your investments comes with many benefits. An advisor can help you control your emotions, stick to your plans and remain focussed on your long-term objectives. In retirement, knee-jerk decisions and emotional mistakes can be extremely costly.

4. Don’t check obsessively

The best advice at times like these is not to sit there continually checking your investments on your laptop, tablet or phone. Switch off your notifications as it will only make you anxious and could tempt you into making a rash decision.

Rarely, if ever, should short-term stock market volatility cause you to change your long-term financial plan. Especially if your goals and aspirations remain unchanged. Indeed, there’s a lot to be said for the sentiment expressed in Kipling’s poem, “If you can keep your head when all about you…” particularly when markets are plummeting.

However, it’s only natural that you may have some concerns, if you do then please do not hesitate to contact us on 01789 263888 or email