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Managing your money in stormy times

By Stephen Womack

Chartered Financial Planner and Director

David Williams IFA

THE very real human tragedy of coronavirus has cast a long shadow over the world’s economies and financial markets.

With many businesses forced to close, and others operating on reduced capacity because of staff shortages, the dramatic slowdown in the real economy has led to significant falls in the value of many stocks and shares.

The FTSE 100 index of Britain’s leading companies was at one point down by almost 35 per cent from its peak in January 2020, although at the time of writing it has rebounded by about one third.

Coupled with the widespread fall in share prices there has been an extreme level of stock market volatility. There have been falls of close to 10 per cent in a single day, sometimes immediately followed by a gain of a similar amount the next day.

Against such a stormy backdrop, Northampton chartered financial planners David Williams IFA is working with clients to keep their pensions and investments on a safe course.

More than 40 years in business and managing client funds worth over £1bn has given the firm a deep experience of safeguarding clients’ portfolios through both the good times and the bad.

We use a very diverse mix of assets in client portfolios, including traditional and specialist investment products which have specific defensive qualities. This diverse balance has the effect of shielding clients from the worst of a market downturn.

Any reduction in portfolio valuations on paper only become real if you are forced to sell assets at a depressed price.

A key part of the financial planning process at David Williams IFA is to anticipate (as far as is possible) when clients will have a need for income or capital withdrawals, and then to ensure that there are assets held in the least volatile asset classes such as cash to provide for this.

This allows clients to hold onto their other investments and wait for values to recover in time. Being out of the markets when prices pick up has invariably proven to be a costly strategy as markets tend to anticipate events in advance.

How long we all have to wait for the recovery from this awful crisis, is of course the crucial question. Ultimately, it will be driven by good medical science that allows governments around the world to ease us back into social and economic normality.

Call David Williams IFA on 01604 621302 or visit www.dwifa.co.uk