If stock markets crash, how do you avoid losses?
We know stock markets are volatile. Falls of 20%, even 50% are possible. Thankfully, they don’t happen every day. But that also makes them hard to predict.
We know they will happen; we just don’t know when and how big the fall will be.
It means you have to be prepared.
Investors often say they know stock markets are volatile. They say they will ride it out. These are good intentions.
Can you imagine if markets crash and no investors panic? People simply went about each day just like any other day. There was no dramatic TV or press coverage. If there was a mention in the newspapers, it’s a paragraph at the bottom of page 6, simply saying 'Stock market falls'. The TV News ends the show with a final comment just to say stock markets have fallen. No drama. No panic. No excessive media coverage. A none event.
In reality, this will never happen.
A market crash is seismic in terms of news.
There will be so much anxiety.
You could see the headline “Billions wiped off world stock markets”
When everyone is in panic mode, it is hard to have good intentions. The news will talk about the ‘flight to safety into bonds’. It's when investors sell and buy bonds. History will repeat itself and investors' good intentions can easily fly.
Even investors who experienced 2007 may not have the time or patience anymore. Many will be wealthier and more to lose.
The question is what can you do to avoid losses?
Simply, you employ the precautionary principle.
If you believe your investments are safe. You need to question, how safe is safe. If you invest in equity funds, are you clear about where your money is invested? You may have never really asked. And why should you; you’ve seen the value of your investments rise; it's been all good news over time.
And every time you ask your wealth manager, they tell you, "don’t worry." So you don't.
You tell yourself you’ll be fine but at the back of your mind is the question, 'What if"
You need to employ the precautionary principle.
What do we offer? It's simple. It starts with a conversation. It doesn't matter how your money is managed, who with or if you do it yourself, we help you design your plan to avoid losses.
Apply the Precautionary Principle. It's better safe than sorry.
Hello,
I'm Nic Round,
The Wealth Coach
We are Independent Chartered Wealth Managers, Chartered Financial Planners, and Certified Financial Planners.
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We are independent for a reason. Impartiality means unbiased.
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We focus on listening to you; engaging in challenging conversations which may lead to advice; they also may lead to helping and supporting you in making your own decisions. We concentrate on finding how you can make the best decisions for you and your future.
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Who you talk to, changes everything.