We recognise that market falls caused by the Covid-19 pandemic are understandably unsettling and may be causing you some concern about the performance of your pension or investment. It can be worrying to see your investments fall in value, especially in these unprecedented times.
Some of our customers have contacted us to see whether the value of their investment has been affected or to discuss if there are any options of safeguarding their financial position. Some have been considering taking money from their policy due to the current performance of the markets or switching their funds to another investment fund which is less volatile.
Before making any changes to your policy, it's vital to consider the important four points below.
1. Focus on the long term
Making decisions about your policy based on short term events and circumstances can have long term consequences for your financial wellbeing and retirement.
It's likely that the coronavirus will continue to have an impact on markets over the coming months. The key thing to remember is that investing is a long-term commitment and ups and downs are part of investing. Investing with a long-term outlook and with long-term goals is the best way to reduce the impact of stock market fluctuations and see out periods of volatility.
There have been many times in the past when major global events have caused markets to fall, particularly in the short-term.
A look back at historical performance of share markets shows that eventually markets do recover over time. It's uncertain when this might happen, but even when you consider events like, for example, the Dot.com crash and the Global Financial Crisis - a long term investment strategy can provide an attractive opportunity for growth.
Remember though that investment growth isn't guaranteed - investments can fall in value too. And it's possible to get back less than you paid in.
2. Consider whether now's the right time to take money out
You will only receive the current value of your investments which might have fallen recently; you may miss out on any future increases in value if the market recovers. We recommend that you seek financial advice before making any changes.
If you're approaching retirement, did you know you can delay taking an income from your pension? For pension policies you can also:
3. Consider how much money you take out
Consider carefully whether you need all the money you're thinking of taking out of your policy at the current time. Once you have taken your savings, you will have less money available to generate the income you may need in later life.
4. Financial advice can help
At turbulant times like this, the skills and experience of financial advisers can really help. If you're unsure how the outbreak of Coronavirus is affecting your investments, or whether you should take action, please speak to a financial adviser. If you don't have an adviser, you can find out how you might benefit from using one, and how to find one local to where you live.
Managing your investments
Why not take a look at our 'Managing your investments' page? You'll find useful information on some of the key things to consider, particularly the closer you get to retirement.
It takes a look at:
- managing investment risk as you approach retirement
- the types of risks to look out for
- how to get financial advice
- how you can keep an eye on your investments
Find out more here.