With investments and falling markets – in shares and commodities as examples – they will go up and down over time and selling out in a down market is rarely a good idea.
For example, since 1980 there have been 3 major downturn events. Each one saw major price reductions in UK shares but all were followed by strong recoveries. Of course, there is no guarantee this will repeat, but it does show how things move up and down. Trying to get in and out of the market at the right time is next to impossible.
However, it is still wise to check if a portfolio is invested appropriately considering the new position, if the risk position has changed or if income needs adjusting.
You may have short-term needs, for example to raise some cash. Consider this with great care. Removing funds from your investment portfolio or pension plan, if this is an option, can have consequences.
To highlight this, if you were to take money from your pension, this could mean you will not be able to make future contributions.
Or if you are to withdraw funds from your investments do you take the money from the riskier assets, which may have fallen in value, or the less risky assets?
In all cases are you sure you know the full range of options available to you to help you in the short-term? There may be options you haven’t considered.
Options such as the various new government support schemes, adjusting your existing debts including mortgages, personal loans, finance deals, and credit cards – any or all of which could be reorganised to raise funds or save expenditure, or even both.
And it is the way you mix these options, balancing them against each other which could make a big difference
Advice and expert help in these cases can be invaluable.
Once you’ve reviewed your current position and short-term needs then look at how your long-term financial forecast is affected.
The most important action in this respect is to run fresh cash flow projections, the models of your position as it evolves over the years.
These projections may now look different because of the changing economic picture.
Model future scenarios assuming a worst-case scenario, a medium impact scenario and a good, strong recovery – how do all these in their different ways affect your finances, well into the future?
This should help with decisions today, including ones around your income and expenditure position.
It is always worth remembering the wise words ‘hope for the best, plan for the worst’.
These two steps, looking at the immediate impact and needs this creates, coupled with the longer-term modelling should be brought together.
There are many other angles to consider within this overall exercise, things like reviewing your protection plans, such as critical illness cover and life assurance.
Take a fresh look at the level of cover you have in place; can this be reorganised at a lower cost or on better terms? Do you need to do something new to protect your family, and because of new threats should you restructure your arrangements?
You may wish to update your Will or put in place a Power of Attorney. Both of which could be vital to your family given current circumstances.
Clearly, your situation will be dependent on your circumstances and future goals. The main message at times like these is Review, Review, Review
Get expert help and advice, this is likely to be a tricky position to work through, having someone work with you during this period, who understands the financial landscape, could be worth its weight in gold.