Coronavirus Implications – Investment Update
Global markets recently tumbled in the last week of February, dragging down the S&P500 (main US equity market) more than 10% in just a week, reflecting rising fears over the coronavirus that is spreading quickly around the world.
What does this mean for you, and should you be concerned?
The recent outbreaks of the virus will only add to the uncertainty and significantly widen the range of outcomes for global economic growth. If the downward trend of new cases in China continues, Chinese authorities may loosen restrictions on business in those provinces deemed less at risk of spread, enabling economic activity to resume. Economic data is likely to be very soft in February, however it may stabilise in March before ultimately returning to normal in April.
It’s important to understand your investments and the level of risks involved. The volatile nature of markets continues to be a reminder of the benefits of diversification and maintaining a focus on the longer term. News reports on changes in market performance can prompt concerned investors to check savings balances and change funds without considering long term trends. Here are some ways you can be confident your investments are working the way you want.
1) Do you know what investment option your money is invested in? The Dairy Industry Superannuation Scheme offers seven investment options (three are 50/50 split among adjacent funds). Three investment options – Conservative, Balance, and Growth are diversified funds. This means these funds invest in a number of different assets such as shares, property, bonds and cash. The other option – Cash, is a single sector option and as its name suggests this option invests only in cash. Make sure you know what investment option you are in and the impact markets may have on the returns.
2) Have you spoken to an expert? A financial adviser can provide you with independent guidance and advice on superannuation and other financial services and products. If you are concerned about the markets, considering changing funds, investing more money or withdrawing some for example to buy your first home, then speaking to a financial adviser can help refine your goals, and provide tailored advice for your specific situation.
3) Need to withdraw money in the near future? If you are looking to buy your first home or are thinking of withdrawing your money for retirement, it’s important that you understand that the value may go up or down with the market and allow for that.
What does this mean for you, and should you be concerned?
The recent outbreaks of the virus will only add to the uncertainty and significantly widen the range of outcomes for global economic growth. If the downward trend of new cases in China continues, Chinese authorities may loosen restrictions on business in those provinces deemed less at risk of spread, enabling economic activity to resume. Economic data is likely to be very soft in February, however it may stabilise in March before ultimately returning to normal in April.
It’s important to understand your investments and the level of risks involved. The volatile nature of markets continues to be a reminder of the benefits of diversification and maintaining a focus on the longer term. News reports on changes in market performance can prompt concerned investors to check savings balances and change funds without considering long term trends. Here are some ways you can be confident your investments are working the way you want.
1) Do you know what investment option your money is invested in? The Dairy Industry Superannuation Scheme offers seven investment options (three are 50/50 split among adjacent funds). Three investment options – Conservative, Balance, and Growth are diversified funds. This means these funds invest in a number of different assets such as shares, property, bonds and cash. The other option – Cash, is a single sector option and as its name suggests this option invests only in cash. Make sure you know what investment option you are in and the impact markets may have on the returns.
2) Have you spoken to an expert? A financial adviser can provide you with independent guidance and advice on superannuation and other financial services and products. If you are concerned about the markets, considering changing funds, investing more money or withdrawing some for example to buy your first home, then speaking to a financial adviser can help refine your goals, and provide tailored advice for your specific situation.
3) Need to withdraw money in the near future? If you are looking to buy your first home or are thinking of withdrawing your money for retirement, it’s important that you understand that the value may go up or down with the market and allow for that.
This information has been prepared by Mercer (N.Z.) Limited for general information only. The information does not take into account your personal objectives, financial situation or needs.This information has been prepared by Mercer (N.Z.) Limited for general information only. The information does not take into account your personal objectives, financial situation or needs.
6 March 2020