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How to drown out the ‘noise’ and stay the course

Financial planning is not a one-off event. We don’t simply sell you a product – an investment or a pension – and then disappear, never to be seen again.

Real financial planning is an ongoing process. It’s about building a trusted relationship that helps you to navigate challenging times, unexpected news, life events, changes in direction and health scares. It’s about challenging thinking and managing behaviour to ensure that your life and financial goals and aspirations are met.

Turn on the TV news at any point, though, and it’s easy to be distracted by what we call ‘the noise’. Brexit, trade wars, climate change, a General Election, High Street troubles, and even the end of the decade are factors which can’t help but affect your own psychology regarding your future.

Helping you to drown out the noise

Recent political uncertainty has had an impact on investors. October figures from the Investment Association showed there had been net outflows of £3.2 billion from equity funds in just three months.

You’ll probably also have seen high-profile news stories about funds suspending withdrawals due to ‘high and sustained outflows’.

Reading the newspapers might give you the impression that it’s time to review your investments or pension, or to change your plans entirely. However, if you’re looking at the long term, it can be important to hold your nerve and not be swayed by individual events.

We recently looked at a comparison of returns on a £500,000 investment made on 23 June 2016 (the date of the EU referendum result). If you’d retreated to cash that day, by 22 October 2019 your investment (at an interest rate of 2%) would have been worth £534,060.

Had you left this invested in the FTSE 100 during this period, it would have been worth £648,715 on 22 October 2019*.

While past performance is no guarantee of future performance, it’s clear to see that investors who drowned out the ‘noise’ and continued to think long term would typically be in a better position now than those who panicked and simply put their savings in a high interest account.

The role of your financial planner

Recently, we looked at why the role of a financial planner is a lot like being an elite level golf caddie. Our point was that we don’t just carry your bags: we provide advice and guidance and help you to keep focused on what matters.

Of course, part of our role is to do the things you’d expect us to – updating a balance sheet and taking care of your investment portfolio. We stay current on financial regulations and rules, inflation expectations and interest rate movements as well as stock market movements and total expense ratios.

We also look at risks that may need to be eliminated by insurance protection. These things allow us to us have a great conversation with you and, more importantly, give you the foundation to make sound financial decisions.

However, we’re also here to drown out the noise and to keep you on track. Our role is that of a sounding board; challenging your thinking and managing behaviour to help you to stay focused, especially when it comes to investing.

We’re here to provide moral and mental support – and confidence too. It is very hard to make all these difficult financial decisions alone. We can be there to say that “Yes, going on that amazing holiday is OK” or “Yes, you can really retire whenever you want”, or “No, this purchase would jeopardise your financial plan.”

Life can also sometimes throw tough transitions our way, like losing a job or a spouse, or taking the huge step to retire and enjoy your financial independence. We’re here as a mentor to help you stabilise and become comfortable with whatever becomes your ‘new normal’.

Our beliefs

At TFP our investment beliefs are simple:

  1. Goals– Create clear investment goals based on your lifetime financial plan

  2. Diversification– Diversify globally across countries, sectors, regions and asset classes

  3. Costs– Control the controllable as costs of all kinds really matter

  4. Discipline – Stick to the plan and maintain a long-term perspective

(For retiring clients cash has a real role to play to help our clients get you through the initial transition into life after work. This also increases confidence, comfort and helps our clients enjoy those things that are most important to them – without the worry of running out of money, whatever happens.)

If you want to find out more about how real financial planning can help you, please get in touch. Email or call us on 01621 851563.

*This does not include the impact of any ongoing charges and is only for illustrative purposes. Past performance should not be relied upon as a guide to future investment returns.

** Performance is based on mixed investment sector average returns


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