Coronavirus Implications – Investment Update
Global markets recently experienced a sharp fall, reflecting fears over the coronavirus that has been quickly spreading around the world. While the falls in February and March have been sizeable, the US share market is still in positive territory over the past year and has delivered positive gains since the Global Financial Crisis (GFC).
What does this mean for you, and should you be concerned?
The pandemic will only add to market uncertainty, and significantly widen the range of potential global economic growth outcomes. If the downward trend of new cases in China continues, Chinese authorities may loosen restrictions on business and travel, enabling economic activity to resume. Market volatility (going up and down) is not uncommon as the US share market fell 14% in the fourth quarter of 2018. While past performance is no guarantee future performance, history does suggest that markets recover in the long term. The US Fed has already taken action to stimulate growth and other central banks might be expected to follow.
If your circumstances have not recently changed, then it is likely your current option(s) is still suitable to you despite recent events. This latest round of market volatility is a good reminder of the benefits of diversification and maintaining a long-term savings approach.
Here are three things to think about if you are considering making changes to your investment:
What does this mean for you, and should you be concerned?
The pandemic will only add to market uncertainty, and significantly widen the range of potential global economic growth outcomes. If the downward trend of new cases in China continues, Chinese authorities may loosen restrictions on business and travel, enabling economic activity to resume. Market volatility (going up and down) is not uncommon as the US share market fell 14% in the fourth quarter of 2018. While past performance is no guarantee future performance, history does suggest that markets recover in the long term. The US Fed has already taken action to stimulate growth and other central banks might be expected to follow.
If your circumstances have not recently changed, then it is likely your current option(s) is still suitable to you despite recent events. This latest round of market volatility is a good reminder of the benefits of diversification and maintaining a long-term savings approach.
Here are three things to think about if you are considering making changes to your investment:
- Know your investment option
The Scheme offers four investment options. Three of these, Conservative, Balanced and Growth, are diversified funds. This means they invest in a variety of assets such as shares, property, bonds and cash, although in different proportions. The fourth option, Cash, as its name suggests, invests only in cash. Make sure you know what investment option you are in and the impact markets may have on short-term verses long-term returns.
- Speak with an expert
Financial advisers can help you make the right investment decisions. If you are concerned about the markets, considering changing funds, investing more money or making a withdrawal sometime soon, then speaking to a financial adviser can help.
- Need to withdraw money in the near future?
If you are thinking of withdrawing your money for retirement, it’s important that you understand that the value may go up or down with the market and allow for that.
This information has been prepared by Mercer (N.Z.) Limited for general information only. The information does not take into account your personal objectives, financial situation or needs.This information has been prepared by Mercer (N.Z.) Limited for general information only. The information does not take into account your personal objectives, financial situation or needs.
25 March 2020