Russian invasion of Ukraine - what should investors do?

ended 24. February 2022

The world has woken up to a full-scale Russian military invasion of Ukraine. Global stock markets have hit the deck,  10-year yields have collapsed and, unsurprisingly, safe haven assets like gold are soaring. Few questions:

  • What will you be advising your clients to do if they get on the phone (and even if they don't)?
  • Should a portfolio with a long-term investmeant horizon be adjusted or left alone, given these circumstances are so extraordinary?
  • Any other advice you'll be giving worried clients and investors?

 

3 responses from the Newspage community

"As heartbreaking as the events in the Ukraine are, markets have seen plenty of wars over the years and will recover. Yes, there will be short-term volatility, potentially extreme, but any loss is a paper loss unless you sell. The challenge for investors is to hold their nerve rather than make rapid adjustments to their portfolios. Over time, history shows equities will bounce back so sitting tight is the best course of action, as hard as it may feel to do so. If you have excess cash above your needs for emergency funds, now is arguably a good time to commit capital for the medium to long-term, meaning investing for at least five years for a good outcome. You will be rewarded and even more so after today. The mantra to buy on the dips holds true and we have just entered a potentially significant one."
"Despite the awful events in Ukraine, we encourage clients not to make sudden knee-jerk changes to their portfolios and will be reminding them that their portfolios are built to weather storms exactly like this. Volatility is part and parcel of investing and the price you pay for the higher returns that investments have historically delivered. To be a successful investor, there are three principles you need to master: optimism, patience and discipline. You need to believe that things will turn out OK in the end, have the patience to wait out both good and bad investment periods, and the discipline to stay the course and stick with the plan. There may be significant volatility in the near term but investors with a longer term horizon should hold their nerve and batten down the hatches."
"Just like the global financial crisis and pandemic, the invasion of Ukraine is the latest major global event that is going to impact your investments in the short term. But it's important not to let 30 minutes of watching the news, as sad as it is, to impact on 30-year investment decisions. A good financial adviser will have put a long-term financial plan in place for their clients and will be urging them to stick to it. As advisers, we will continue to monitor our clients' investments and events as they unfold but a well structured and diversified portfolio will rebound from this latest global crisis."