When is the right time to revisit your wealth management strategy?

Many investors are currently asking their wealth management firm whether they should re-evaluate their investment plan? The recent crash on our global markets is unlike anything we’ve seen in modern history. Defined by its volatility, velocity, and magnitude, never before has industry collapse been so sudden and vast. As a result, many investors have found their portfolios down as well.

In this situation, investors may choose to explore new wealth management approaches in a bid to earn their money back. In market crashes, wealth management firms typically see an increase in clients asking if it’s a good time to buy. This behaviour reflects a fear of missing out on a V-shaped market rebound, as happened to many investors after the 2008 financial crisis.

It’s important to remember that the nature of this financial crisis is different. Clients should focus first on their health and family, and how long they’ll need emergency funds to last, before thinking about introducing a new wealth management strategy.

In reality there is no definitive ‘right’ time to invest in the market, as the ‘right’ time will be different for everyone, depending on finances, personality traits, family situations and many other highly individual factors.

Here are three simple tips that we recommend investors live by when making investment decisions:

1. Know when is the right time to invest for you
Hold off investing until you’ve paid off ‘bad’ debt and built a ‘rainy day’ emergency fund. If you are struggling with ‘bad’ debt or don’t have an emergency fund, putting money into investments won’t right that ship. Investments help with the future, but they can’t help if things aren’t right today.

2. Have a plan
A goal helps establish a timeline and how much risk you should take on; without a goal, you are flying blind. From a goal comes a wealth management plan, a risk strategy, and so on.

3. Don’t buy what you don’t understand
Erring on the side of caution is not a bad thing. If you can’t explain how the investment works in simple terms and are unsure what the investment is made of, then it’s not wise to put your money there.

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If you would like advice on whether now is the right time for you to start or re-evaluate your wealth management plan, get in touch with us.

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