“Your long-term strategy is one of the most important aspects to consider right now. Do not let short-term volatility affect your long-term plan,” advised two financial planning experts from International Finance Planning, a bespoke investment and savings strategy company in the British Virgin Islands.
The advice came at a time when the world and financial markets continue to react to the effects of the COVID-19 pandemic. The comments were made in a BVI Finance’s Breakfast Forum series webinar titled “What Should Your Reaction Be to the Market” held on Wednesday 20th May. Presenters were Mark Gumpright, CEO of International Finance Planning, who qualified with the Chartered Insurance Institute as an independent financial adviser since 1997, and Brian Alexander, a qualified independent financial planner with over 20 years’ in the financial industry.
Alexander said the market is “volatile” and “unpredictable” since the recent February 2020 highs, and subsequent sharp pull-back of around 35%. But he added that, “we have seen a recovery to date in the region of 18%.”
“Because of the way the whole world has changed—we have now gone to work from home—and there are indications in parts of the market that certain industries have gotten stronger; like buying things online, and in the health industry.
Investors can look to key areas in the market that are poised to produce respectable returns, but success in today’s market will come with “a little more risk in some ways,” said Gumpright. “Now is not the time for flight in response to market prices dropping, as the drop will in fact result in investors getting more value.”
“The money invested will be buying more units in the funds or stocks for the same contribution. Thus, investing or buying more now should yield good results when the market recovers and the long-term strategy should still remain.”
Alexander and Gumpright advised that seizing the opportunity to invest while the market is undervalued is a good strategy. “Continue to purchase while undervalued, using the dollar cost averaging approach with monthly contributions and certainly with single lumpsum investments at this time. Continue to look at the potential for growth from value stocks. Seek advice as to what sectors would suit your risk profile,” they advised.
According to the financial advisers, ultimately, your reaction to the market should be based on your current situation, goals, budget, time frame and risk appetite.