COVID-19: will the stock market affect your pension pot?

Like many, the impact of Covid-19 on the stock market may have a significant effect on your investments and future plans. Concern is a reasonable reaction, but it’s important to keep a clear head and plan your next steps wisely.

How has coronavirus impacted the stock market?

The threats of a global pandemic and widespread lockdowns have shaken investor confidence. As a result, we have witnessed the sharpest ever “bear market”, a period when the price of stocks declines over time. The impact so far has been worse than both the 2008 Financial Crisis and 1987’s “Black Monday”.

What does this mean for your investments?

If you are under 40, this may be the first significant downturn in your investing life. Until now, the period after the 2008 financial crisis had been unusually low in volatility. However, it’s important to remember that your investments will have time to recover and investment markets will continue to deliver longer-term returns.

If you are retired and drawing from investments, or nearing retirement age, this downturn could not have come at a more challenging time.

Should you postpone your retirement?

If you are approaching retirement age, now is an ideal time to review your targets, consider whether they are still realistic and make adjustments if needed.

You may want to postpone your plans for 2 or 3 years and allow your assets to recover, while perhaps investing more. Depending on your circumstances, it may even be appropriate to take on more risk.

If it is not possible to delay your retirement, you could use your savings that have not been impacted by the stock market falls (such as cash) to live off for a while. The longer you can leave your pension untouched, the greater chance it will have to recover.

Is now the right time to sell?

The smart advice is to not sell at or near the bottom of the market. This simply realises any losses.

But how do you recognise the bottom when it arrives? This is only clear in hindsight and the current situation is far from predictable. For the first time in history, the entire global economy has been halted, with an estimated 50% of the world’s population currently in lockdown.

Where can you get further advice on your options?

Employing a financial adviser can help to set you on the right path to the future you always dreamed of. In addition to offering balanced advice, they can also have many tools at their disposal, like cashflow modelling and investment analysis software. 

At Lubbock Fine Wealth Management, our team has extensive experience with similar situations. We can help you to formulate the right strategy for your specific needs.

We offer a no obligation first meeting to discuss your needs and objectives. To arrange, call our team on 0207 490 7766 or email Andrew Tricker at andrewtricker@lfwm.co.uk.

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