As January gives way to Febraury, we have already broken our new year resolutions and trying to remotivate ourselves with a constant stream of forecasts and predictions for the year ahead. We’re not going to add to them in this blog. At the end of the day, we don’t add any value by making bold guesses about the future, because our crystal ball is no clearer than anyone else’s.
But where we can add a lot of value is by constantly reminding you of good practices and behaviours that will stand you in good stead no matter how the year ahead turns out.
Stay informed, but don’t react
One of the riskiest things you can do these days to undermine your financial health is to listen to news whether it’s on the radio, in print or online. There is a never-ending parade of experts, each with a negative story to tell. Inflation is continuing, stock markets are volatile, a recession is coming and there are significant global economic headwinds.
Some or all of these may be true, and while it’s important that you stay informed and aware of the world around you, the key is to avoid knee-jerk reactions to the latest wisdom you heard today.
Stick to your plan
Once you’ve accepted that the world is simply an uncertain place, that is the time to revert to areas where the ground is firmer. A well-constructed financial plan is built on strong foundations. It takes account of your specific goals and objectives, your own circumstances, and your personal appetite for risk.
Your investment portfolio is constructed with all these factors in mind and is the best roadmap to see you through the uncertainty that the world throws at you. We certainly don’t promise that there will never be times when it feels like you’re swimming against the tide, instead we fully expect this to happen when markets are volatile. But we definitely subscribe to the belief that by maintaining your focus on your long-term goals and by not making short-term tactical decisions, that is the correct path to achieving your wealth goals.
Remember the saying that money is like a bar of soap – the more you handle it, the smaller it gets. So don’t try and tactically exit and enter markets – leave your investments alone in line with your long-term plan.
Dial up your savings
If you are already saving regularly whether that’s for your retirement or some other financial objective, that’s great – keep it going. If you haven’t started saving yet, the right time to start is today. Not in a year’s time when the market has dropped another x%, because who will guarantee that it’s going to fall? We certainly can’t…
Over the years we have seen countless examples of people keeping their savings in the bank, just because they are nervous about markets in the following few months. They decide to wait “just a short while” until markets improve. Apart from the negative impact of inflation eating away at their savings every day, the challenge is when to then enter the market. Unfortunately, no-one rings a bell when the market hits the bottom, so inevitably people end up missing a lot of gains before being convinced that an upward trend will be sustained. They end up “buying high and selling low” – a sure path to financial destruction.
Start saving now and if you have a lump sum to invest, there are ways that this can be invested wisely to protect against any significant market moves. Talk to us and we’ll help you identify the approach that is right for you.
Pay yourself first
Assuming you have decided to start or continue saving in 2024, make this a high financial priority for the year ahead. Schedule your targeted savings to leave your current account immediately after you are paid each month. Money left sitting in your account has a nasty habit of getting spent, so instead make your savings (paying yourself) the first bill to be paid each month.
Look after your personal health
Looking after your physical and mental wellbeing is an important element in staying financially fit too. Healthy people feel better, eat better, think clearer and generally are more optimistic and rational. This feeds through into calmer and controlled decision making about all areas of their lives, which of course includes your finances. So seek out opportunities to improve your fitness in all areas of your life – your financial portfolio will thank you for it.
We hope that 2024 is a really great year for you and your family.