Covid-19 and your investment strategy: Three ways to regain financial security

As the coronavirus disrupts economic markets worldwide, it can be particularly daunting for older Australians with accumulated investments to watch their dollars drop. But even amidst the current uncertainty there is still opportunity for you to maintain your wealth and support your family’s financial wellbeing in the long term.

During times of crisis it’s easy to forget that markets bounce back. Research from Vanguard shows that if you had invested $10,000 in Australian bonds in 1989, 30 years later it would be valued at over $105,000 in 2019. That’s despite the Global Financial Crisis in 2008 and the Dotcom Bubble Burst in the late nineties significantly crashing markets.

And while you may not necessarily want to wait another 30 years to see your investment yield the same kind of return, it’s important to remember it’s possible to see through the inevitable downturns and stay on course to achieve a significant return.

Here are three tips to give you peace of mind and help you ride out the coronavirus wave and feel confident in your investment strategies.

Remember the ‘why’ behind your investment strategy

With headlines about recessions causing a culture of fear, it’s understandable that many are seeking to make some changes and alter their investment strategy.

Before you do, step back and think, what were your reasons for investing in the first place? Perhaps you want to support your grandchildren with their education or pass a nest egg on to later generations. Maybe you are seeking to fund travel later in your retirement. Whatever it is, remembering the why behind your broader financial strategy and lifestyle goals can help you stay on course.

Seek advice from experts

Given the amount of investment advice currently circulating, it’s easy to feel overwhelmed and anxious. And you wouldn’t be alone either. Without input from an adviser, many people are unaware of how to put their best financial foot forward.

The good news is you don’t have to go at it alone. Year round, but particularly through times of uncertainty, you should consider consulting a specialist who understands the environment and can tailor a financial plan accordingly.

Take for example the recent announcement around superannuation withdrawals. Just because you can, doesn’t mean you should. Yet already more than 600,000 Australians have applied for early release of up to $20,000 from their superannuation accounts under the coronavirus assistance scheme. This $20,000, even at modest returns of 5 per cent per annum, would be worth more $45,000 in 10 years’ time.

Therefore, it’s important to seek counsel to help you achieve your financial and lifestyle goals and avoid making rash decisions that may harm your future.

Use the most suitable investment products

There is no ‘one solution fits all’ investment strategy. You need to determine what works for you and your family. Understanding the role of superannuation and other investment vehicles is vital for achieving your financial goals in the future.

For example, investment bonds can be a suitable investment option used to fund major life expenses, complement superannuation or pay for aged care. Focused on longer-term investing, they are a tax effective alternative to superannuation, yet many still don’t know what a bond is or how it can work for them. Making considered and informed choices in the short term is the surest way to stay on course and maintain yours and your family’s personal and financial wellbeing in the long term.

IMPORTANT LEGAL INFO This article is of a general nature and FYI only, because it doesn’t take into account your financial or legal situation, objectives or needs. That means it’s not financial product or legal advice and shouldn’t be relied upon as if it is. Before making a financial or legal decision, you should work out if the info is appropriate for your situation and get independent, licensed financial services or legal advice.