What we learned in 2020

Written on the 4 February 2021 by Wayne Billington

What we learned in 2020

From a personal perspective, 2020 taught us to be more adaptable, flexible and above all else, much more resilient.

From a financial perspective, the doom and gloom that prevailed for most of 2020 did not eventuate to the extent of the predictions that's not to say it's still coming my crystal ball is no better or worse than anyone else's.

However, in 2020, there were investors and retirees that achieved a relatively strong outcome given the prevailing circumstances.

And with the benefit of hindsight, there are lessons we can all learn as we navigate into 2021.

Stay focussed on what really matters

Whatever is going on or going down - staying focused on what matters the most, even in a changing economic environment, pays off this means setting clear goals and strategies then sticking to them as best as you can just as in the book Hitchhiker's Guide to the Galaxy Don't Panic!

Adjustments and tweaks will always be needed however, wild swings in your investment strategy will simply put you further behind when the upswing starts.

With that said, we thought we'd share with you some very timely and pertinent points from a recent economic outlook piece from Vanguard.

Vanguard's key themes for 2021

  • Even with an effective vaccine in sight, the recovery's path is likely to prove uneven and varied across industries and countries.
  • Lasting effects from the pandemic will be multifaceted, yet the global economic trajectory will be more similar to the pre-COVID world.
  • We anticipate some modest reflation but not a return to high inflation.

Our virtual environments are saturated with coverage of the markets, the global economy, and the COVID-19 pandemic. So, it's understandable for you to wonder how these factors might affect your investment plans and the potential achievement of your long-term financial goals.

Vanguard has designed a quick overview of the economic opportunities and challenges you may face in 2021 to help you keep focused on what matters the most.

Think of it as a conversation starter, a natural way to connect with us and help keep you on course toward achieving your financial goals.

Uncertainty about where the global economy is headed can breed an atmosphere of anxiety and uncertainty, especially with the backdrop of an ongoing pandemic.

When it comes to the global economy and the markets, adopting a proactive approach can go a long way toward alleviating your worries and averting emotionally driven investing decisions.

Vanguard advocates a "three A's" behavioural approach:

Assess the Situation

  • Check in with us about how you are feeling.
  • Are you worried about a potentially significant market drop or a perceived risk that your long-term goals are in jeopardy?

Address the Situation

  • Worries about the global economy and the markets are common and we can share resources that speak to your concerns.
  • It is helpful to focus on your long-term goals.
  • The two major elements of wise investing are knowing what you can and can't control and why you should keep your emotions and investment decisions separate.

Audit your Engagements

  • Measure your effectiveness, evaluate your behaviours.
  • Do you understand the importance of planning for the long term?
  • Do you opt to stay the course, maintaining your desired asset allocations instead of converting a large portion of their portfolios to cash?

Find out more about the economic outlook post Covid-19.

Contact Parkside InvestorPlus for a non-obligation initial consultation about your financial structure, plans and retirement goals.


Author: Wayne Billington
About: Wayne is the Principal and Director of Parkside InvestorPlus Pty Ltd, and is authorised to provide financial planning services to clients.

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