The world can seem like a scary place when conflict arises - even though we are many thousands of kilometres away from the action, it is normal to feel unsettled and worry about the impact on our lives, our families, our KiwiSaver funds and investment balances.
We love this drawing from The Sketch Guy - Carl Richards, a very simple illustration of where to spend your time and energy.
In his words: ‘if you quit worrying about things you have no control over, and stop obsessing over things that don’t matter, where else might you be able to invest that extra time, energy, and attention?’
Does the current conflict in the Middle East matter? Absolutely. Can you control it? Absolutely not. Focus on the things you can influence including how you react to these events.
So what should you do with your investments when markets are uncertain and the world seems a scary place? Unless your personal circumstances have significantly changed, the best thing you can do is likely to be nothing. If you have the fundamentals right - you are invested in a suitable fund to match your risk tolerance (how much risk you are comfortable taking) and your risk capacity (how much risk you can afford to take based on your asset base and timeframe) - then don’t be tempted to do anything.
While no one has a crystal ball, we know over time financial markets recover and outperform money sitting in the bank. The bank is a great place for your short term income and capital needs but returns are unlikely to keep pace with inflation. Managed funds such as KiwiSaver experience more volatility but generally produce higher average investment returns over time.
If your personal situation has changed, then you should speak with an Adviser to get some guidance and a second opinion before you go making any changes.
If you want to talk things through or need some reassurance, please contact us for a chat.