2020 has been one crazy year and it’s still got a little way to go yet.

When it comes to investing, both inside and outside superannuation, 2020 has been another case of proving just how costly it is to panic.

In the early days of the pandemic in March, sharemarkets around the world suffered a severe drop. Sharemarkets tumbled as fear took over. Property prices sagged. People’s super balances fell.

Many people panicked. They started moving their money out of investments AFTER they’d fallen. This pattern has been repeated time and time again. History was repeated!

It would be wonderful to have a crystal ball and to see a global pandemic coming and get out beforehand. Unfortunately, no one has one that works… and anyone who tells you they can pick the short-term direction of investment markets is kidding themselves (be wary of anyone offering that service).

So, once the pandemic took hold, there was one clear strategy that was going to work… STICK WITH THE PLAN. If you use sensible investing strategies, the only way you lose money is if you sell while things are down. If you have good quality investments and you hold onto them, sometimes they fall in the short-term, but they go up over time.

Investing isn’t risky if you do it sensibly and a lot of that comes down to managing emotions. Those who were able to manage their emotions have come out on top. Those who couldn’t, have made financial decisions that may have dire consequences for their financial future.

Dealing with the emotions isn’t easy. I have investments and super of my own and it’s never comfortable seeing them go down. However, what we’ve seen since the big fall is a big rebound! The global sharemarket recently hit new record highs and property prices have held up.

Many people have been pleasantly surprised to see their super balances right back on track.

Sadly, some missed the recovery because they got out while things were down. They’re the people telling you that investing is risky, shares are bad and super is a con. Often, it’s the case that their experience was caused by making poor financial decisions and they want someone to blame.

There’s no turning back time and just like the GFC a little over a decade ago, this downturn has been another a great lesson in just why it’s so important to have a plan and stick with it.

I’ll never profess to have a crystal ball, so I can’t tell you what 2021 holds. However, I can tell you that a well thought out, sensible, logical approach to planning your financial future will yield great dividends. Make a plan and stick with it!

Cheers,

Daniel