Our approach to financial planning has evolved over the years. Today, we encourage our clients to work out what they like doing, and spend their time doing that. We then help them build their finances around those plans. This comes under the general heading of ‘financial wellbeing’. (Did I mention I recently won an award?!)
The weekend just gone saw the resumption of my son’s school’s annual camp out. Everyone is encouraged to come to school on the Saturday, enjoy a BBQ and some inflatables and generally run around making the most of the fields and outdoor space that form part of the school before crashing in a tent for a few hours’ sleep. After a two-year absence because of Covid, it was lovely to see both children and parents enjoying the sunshine, the bar (age appropriate of course) and, for me, the tea stand. They say absence makes the heart grow fonder, and whether because it was my son’s last camp out before he leaves the school or just that it was the first in three years I don’t know, but we had a great time.
Spending energy on things you like to do is rewarding, far more so than worrying about investment markets which are beyond everyone’s control.
The news is full of doom and gloom and there is no doubt the cost-of-living crisis is impacting everyone. It’s always a worrying time when costs go up and portfolio values go down, which they most certainly have done so far in 2022. Approaching this from a glass half full perspective though, we thought we’d share this graph which plots our two favoured Level 3 (on a scale of 1 to 5, with 5 being high) strategies – Sarasin’s Responsibly Managed Portfolios [blue] and Vanguard’s LifeStrategy 60% Equity [red].
Plotted from the start of 2020, so weeks before the pandemic hit, these strategies are 8% and 4% higher respectively (net of investment charges, but gross of platform and advice fees). They are both over 20% higher than the lowest point in March 2020. Our view is if someone had said to us in March 2020, “You’ll be back above where we were before the crash within a couple of years”, we’d have thought that was pretty good.
It’s only because markets rose so quickly (probably far too quickly) up to the end of 2021 that the drop in 2022 seems so severe. If they had gradually recovered from the 2020 lows to where we are today, I think we’d all have been okay with that.
These are very challenging economic times, but the circumstances dictating them are beyond our control. So we’ll keep an eye on everything for you and encourage you to focus on things that you enjoy doing instead of worrying about investment markets that you can’t influence.