“This too shall pass” is currently my favourite quote. I am not sure who it is attributed to, but I first came across the phrase when my cousin revealed her latest tattoo a year or so ago (the merits of tattoos we will leave for another day!). Since then I have heard Tom Hanks say it when talking about fame. I think it can encompass various parts of an individuals’ life, maybe they are going through a bit of a rough patch and it’s another way of saying it won’t last forever. It reminds me of investment returns in 2022, whilst we may not have fully recovered from last year, I hope the positive start to this year has reinforced….
· Stock markets are always ahead of the economy. We are living with higher energy and food prices, plus the Bank of England has increased interest rates again this month. Yet, the returns so far this year have been positive. This is because the markets have already factored in the bad news we are currently living through.
· Investments returns are only a moment in time, no matter what your investment is worth you have the same number of units, it’s the market valuing differently…..”This too shall pass.”
We know some bad news is worse than others….for example 2022 was a bad year for investments, but like most things in life….it could have been worse. The table below highlights the investment percentage gain required to recover and restore a loss.
The higher the loss means the higher the percentage gain will be required to recover, and in all likelihood the greater time it will take to recover. For example a 30% loss is likely to take longer to recover than a 10% loss. Instead of continuing to withdraw money from an investment a client should consider using a cash reserve if they are relying on income from an investment.
Some clients might have a plan to spend all their investments within a set period and others know that their investments can weather most periods of investment volatility, each client situation is different. However, using a cash reserve for a period can help to protect the longevity of a client’s income and the value of their total assets. A financial plan includes a variety of different aspects and doesn’t solely concentrate on what investment funds you hold. Holding a cash reserve and willing to use it at the right time is vital.
Some of you know I run my sons under 7s football team (Feering Falcons). Like many grass root sports teams there is a lack of money floating around. I am sure many of you have children and grandchildren who play in a team, I know from personally experience donations will be greatly received by your local club. Whether the money goes towards a new kit, pitch hire or training equipment it will make a massive difference. All sports should be inclusive and part of this is making them as cheap as possible for the children. Another parent kindly sponsored our training tops, and we spent £250 on sponsoring the kit (you might need to zoom in to see our name).