Manage investment during coronavirus The Tonic

Human behaviour being what it is, sometimes we need protecting from ourselves

Ideally, we’d ALL make timely, active, evidence-based decisions about our lives! But humans aren’t always rational. We’re lazy, too busy, don’t have the information we need, or just focused on other priorities… how can we fix this?

Humans make mistakes – especially around money. Could you be one of those people that rushes into decisions?! Honestly? Research shows that we need help making good financial decisions.

Did you know that a recent change in UK law means that most adults in England will be become default organ donors when they die, unless they choose to opt out? Previously, people had to opt in.

The aim of this change is to overcome the problem of inertia. The being problem that even supporters of organ donation never got round to opting-in. With the best of intentions, we never get round to things.

Not only are we lazy, we also panic

We can be prone to behavioural biases, allowing feelings to cloud our judgements, or perhaps create faulty thought-processes. This is particularly true around money, we have found! In panic mode, we don’t make good financial decisions!


In panic mode, we don’t make good financial decisions


Coronavirus is a good reminder that none of us knows what lies just around the corner for us or for the economy. Our plans need to cover a wide range of possible outcomes rather than assuming things will stay the same.

With lockdown due to the coronavirus currently under way, are we making good decisions?

Are you anxious about economic uncertainty?

With stock markets falling, are you tempted to cash in investments? It is common for people to be enthusiastic investors when markets are soaring ahead. And then to sell when prices fall, which is the opposite of successful long-term investing.


People often prioritise immediate spending, not realising they impoverish their future


For a more successful outcome, drip-feeding in a regular monthly amount through all market conditions and across a diverse range of assets can be far more successful.

We may joke about ‘money burning a hole in our pocket’, bursting to spend it. But it’s a truism. People often prioritise their immediate spending, not realising that buying things today can impoverish their future.

Right now, we’re all feeling uncertainty. Now is the time people often make mistakes. Now is the time to make good financial decisions.

Hold your nerve when it comes to investments

Have you been tempted to sell long-term investments rather than to tap into ‘rainy day’ money? People who have an emergency fund may not want to touch it in a crisis. Mistakenly, they prefer to sell investments earmarked for longer-term spending, but again, this undermines their secure longer term future.

There are so many options on the table right now. Don’t rush your choices. Coronavirus has led to a raft of special government initiatives to help people whose income has been hit by the lockdown. And these are on top of the normal State benefits that are available.

Banks and financial companies are helping people too. It is important to consider all the options available, not just to take the most obvious and easiest one. You could end up kicking yourself later on.

Pension policies are one of those changes that protect you

Concerned that the UK’s population was ageing but that fewer people were saving for retirement, the government instigated ‘auto-enrolment’ into pensions, unless people chose to opt out.

Like the organ donation situation, this turned inertia from a problem into a force for good. Instead of eligible employees having to make the effort to sort their own pension out, since 2012 they have automatically been included in a scheme. Unless they made the effort to opt out.

Since then, the numbers participating in workplace pensions has risen to 18.7 million from 10.7 million.

Financial decisions are not always easy, even for those with high levels of financial capability. Good financial planning can help overcome our own lack of knowledge and our behavioural biases that would otherwise undermine us.

So before you make any financial decisions, take a deep breath, look at ALL your options, and think further than the end of your nose! You’ll thank yourself for it later.

What can I get with my pension retirement checker

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Chris Clarke

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