Keeping a calm mind during a crisis is the best option in the long run. This logic not only works for your everyday life but also with impact investments.
2020: a year we probably will collectively memorise as one of the most exhausting years of modern time. A global pandemic creating daily headlines, exhausting US-elections dominating our news feeds, and extreme restrictions into our daily lives has not particularly helped us to relax. It’s understandable that some of us might lose our temper and turn to rash decisions.
During the lockdown in spring, we saw many self-cut hairstyles, Zoom workout sessions, and newly learned instruments thanks to YouTube tutorials. Now, experiencing coronavirus-fatigue, those rash decisions could also be made regarding investments. During 2020, this nervousness was reflected in the financial media and stock market with sensational headlines and some dips characterising the period.
Barring financial emergencies, if you are thinking about freezing your long-term investment during this crisis, you should take a look at the big picture first.
Development of the stock market 2000-2020
The development of S&P500 (most important US stock index) in the last two decades.
Let’s have a look at some concrete worries, that may be on your mind:
The market can’t decide which direction to take, what should I do?
The last century has delivered a good answer to this question: wait and stay patient.
My portfolio value has suddenly shrunk, is it time to get nervous?
Probably the best response is still: wait and stay patient.
Considering the current global situation, I’m unsure and need some investment advice.
Here you go, something that has often proven itself over time: wait and stay patient.
Long-term investments live on patience
Long-term investment mostly needs one thing: patience. Getting nervous or greedy during a crisis is the wrong approach for a long-term investment. Instead, it’s better to take a deep breath, take a step back, and analyse your personal financial situation thoroughly.
Short-term market fluctuations or economical crises can’t predict how your investment will fair over the next ten or fifteen years, just like a clairvoyant can’t tell you what your future holds. Patience has paid off in the past and that won’t change in the future.
With your impact investment, you are already contributing to a better future by investing in companies that are working to the same end. They take care of new technologies to better the planet, work hard on gender equality, or think of new innovations to design a more sustainable everyday life. And what about you? You’re taking it easy, letting your investment do the work for you.
What to do in an emergency?
We are aware that 2020 has made it very difficult for a lot of people and financial distress can happen anytime. While we are hoping that the situation for many individuals recovers soon, you are always able to withdraw or discontinue your investment with Inyova. Changes or a temporary stop to your ongoing investment are also an option.
When in doubt, before getting guidance from news reports or market fluctuations, remember your initial thought process: you are saving for the long-term. Your strategy is optimised to the risk profile of your financial situation and it can withstand fluctuations. Thinking about changes makes sense, as soon as your situation dramatically changes – for instance when your salary situation changes or when you suddenly plan to buy a home. Take it from US investor and business tycoon Warren Buffett: “The stock market is a device for transferring money from the impatient to the patient.”
Don’t have a strategy with Inyova yet? Get your personalised impact investing strategy here – it’s free and non-binding. Using our easy online tool, you pick investment themes based on your personal values and interests.