June 27, 2016 Paula Benson

Why you shouldn’t panic!

Staff Blog

There are times in life where you listen to the news with a heavy heart, and a slight panic.  It’s fair to say the big news stories of the last few weeks have left me feeling this way, following the tragic loss of life in Orlando Florida, and the murder of Jo Cox in the UK.   Label them what you will – hate crime, terrorism – it doesn’t matter how they are portrayed, the reality is that in the global village of today’s world you acutely feel the pain of these events as if they happened down your own street.

As Business Development Manager at Income Solutions, I make sure I keep up to date with the news and read as many articles as I can.  As a Financial Planning firm, we are very interested in behavioural investing and the flow on effect big news events have on the way people view investment markets.

Last week I’ve read articles around SPECULATION of the Brexit outcome – Britain’s decision leave the European Union, for which Jo Cox was passionately campaigning against.  I was horrified to read one article where the author was promoting changing investment options for superannuation investors based on what MIGHT happen.  For example, the author’s suggestion is that the Australian share prices MIGHT be affected by this decision.  The author’s strategy was to sell now while the price is high and then hold cash until it’s right to buy back into Australian shares at a low price.  The author doesn’t predict when that “right time” might be.

NO!  I feel so strongly against this sort of SPECULATIVE advice that I’ll just repeat that.  NO!

Let me give you a definition of speculation, taken from the Macquarie Concise Dictionary: Trading of commodities in the hope of profit from changes in the market price, engagement in business transaction involving considerable risk but offering the hope of large gains.

Now let’s consider your superannuation – a long term INVESTMENT designed to provide you with income when you retire.  From the same source, the definition of investment: The investing of money or capital in order to secure profitable returns, especially interest or income.

Let’s face our own reality.  Unless you are a qualified investment analyst with access to financial reports (which you know how to read and understand), I doubt you have the skill set to know how to time to market.  Event trained and experienced Fund Managers who spend their working week researching and making investment decisions don’t always get it right.  I honestly can’t think of one scenario in 25 years in the industry where I recall a happy outcome.  My over-riding memory of clients who have taken this step is seeing their stress and feeling their loss.

Besides, you seriously have better things to do.

Instead, invest in yourself.  Be the best you can be at your chosen profession or even just life in general.  Set some goals, lifestyle and/or financial, and work hard towards achieving them.  Then outsource – just as most people don’t service their own car or build their own house, your investment decisions should be outsourced to a trusted Financial Planner.  Let your only investment decisions be around how much energy you can place into making your world a better place to live in.  If you can achieve this, by extension of the positive things you are doing, you can contribute towards replacing those heavy news stories with more good news stories.  Even if it’s only the local news.  What’s more, you’ll be spending time enjoying life.

Alison Adams
Business Development Manager

 

Please note: The advice in this article is of a general nature only and has not been tailored to your personal circumstances. Please seek personal advice prior to acting on this information.

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