How to Act in Times of Financial Market Turbulence

How to Act in Times of Financial Market Turbulence

05:29 20 March in Blog

The current global Coronavirus pandemic has caused financial markets to be highly volatile,. Equity markets are falling back at the moment, but when this is over, gains may be observed over an extended period. That said, it’s natural to feel uncertain and concerned about the impact of financial market turbulence on your investments and pension. Talking to an expat financial advisor in the UK may offer some clarity on what you can do.

Most of their clients are pension investors, which means that their investments are designed for a longer term. An expat financial advisor in the UK may look into local industry guidance and share them with you. Here are some of their findings, which offer suggestions on how you can act during this time:

  • Don’t panic – Whether you hold a pension, ISA, or drawdown, it is advisable to keep your cool and don’t make decisions in haste. Remember that where investments are concerned, decisions made under pressure are rarely the best. Keep in mind that those investments are designed for the longer term, usually for at least five years, and possibly more for a pension. Recent stock market crashes should be viewed against them, so avoid making long-term investment decisions based on market fluctuations happening now.
  • Don’t cash in – When you panic, you may be inclined to withdraw your earnings. But remember that your pension, drawdown, or ISA is designed for the longer term, so wait out the crisis, be patient, and the markets should recover eventually.

  • Mind the context – An expat financial advisor in the UK would advise you to think about context. For instance, even if the decline in the stock market has been around since the start of 2020, a period of growth occurred beforehand. FTSE 100 index increased in value by over 12 percent in 2019. This should point out that longer-term investments must be judged over a longer term.

  • Think of your situation – Most investments are spread across different assets, which means that their risk is also spread out. Instead of basing your situation on the headlines, you may want to consider your unique situation and rebalance your investments.
  • Review withdrawals – This applies if you have a drawdown. Your expat financial advisor in the UK would suggest withdrawing only natural income to avoid depleting your investment’s capital value. Alternatively, you can withdraw only from your cash savings to avoid touching more exposed investments.