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One of the investment houses we use, Brewin Dolphin, put this content out on email last night:

With the market’s interpretation of the risks of the coronavirus shifting greatly as at the end of February, our Head of Research, Guy Foster has given the following update. 

The real risk to the economy and therefore the lasting impact on people’s savings is likely to be through the efforts to limit the spread of the virus. These measures will cause short term but potentially quite dramatic curbs on economic activity. 

We are confident the economy will recover and strengthen once these curbs can be removed, but we can’t be as confident about exactly when that will happen. In the last few days central banks have announced policy measures to offset some of the deterioration in outlook. 

Investing, unfortunately, does involve shouldering these and other risks, but with a focus on long-term investing we can ride out temporary disruptions to markets and the economy. 

Brewin Dolphin 02/03/2020 17.24

Comment

The key message from a variety of sources, commentaries and webinars digested over the last week is to remain invested.  This is nothing new.  In times of heightened volatility, the big risk is coming out of your investments.

If you remain invested at some point in the future markets will recover and you will feel the benefit.

It’s slightly different if you are drawing an income from your invested assets, for example in Drawdown from your pension fund in retirement.  The action you would take depends on how you are invested, what the underlying investment funds are, and what your overall position is.

It might be appropriate to stop drawing income from your invested assets for now and switch to drawing income, perhaps at a lower level, from your cash reserves.

If you are not sure please get in touch and ask for advice.  Your likely best response to this volatility is to do nothing with your underlying investments, stay invested as you are and be patient.

 

Steve Speed                                                                                                                                                              03/03/2020