Time to panic?

With markets seemingly in freefall – the FTSE All-Share is actually slightly up (+0.63%) compared to the same time (April 4th) last year, but let’s not let that get in the way of a good headline – I have had one or two emails from concerned clients, particularly those in decumulation and that is understandable with all the media “noise”.

 With client portfolios still very much in positive territory due to substantial gains of the last 12+ months it probably isn’t time for panic at the disco quite yet, and the message, as per several of my recent blog posts is to stay calm, remain invested and tune out the noise – remember, we’ve been here (many times) before.

 The graphic below shows Capital Asset Management’s 100% equity portfolio since 2011 – there’s an awful lot of history (and market wobbles) here.  Compare the portfolio on the eve of COVID (March 2020) to today (A)…

This is an 8% annualised return (5% above inflation – CPI), even with the COVID correction and inflationary spikes.

 That said, we mustn’t ignore client concerns, and the role of a professional financial planner is to provide calm reassurance.  As part of the annual cycle of reviews one of the things I do is to ensure clients always have enough cash to meet their short term commitments and that includes, in times of extreme market turbulence their personal cash flow needs (rather than withdrawing from  portfolio) and the approach I have found works best in arriving at a suitable figure is best described by the following magic formula: EF (Emergency Fund) + KC (Known Costs)+ PW (Portfolio Withdrawals) and you can read more about this about in my blog post HERE.