Part of the planning process involves analysing your financial resources and determining how to best use them to help you achieve the financial future of your dreams. This helps to inform the investment strategy that determines what assets you buy, and in what amounts.

It is all well and good to set your portfolio up on day one to comprise a list of excellent investments that we anticipate will grow in value and generate you a passive income stream, but what happens when it doesn’t go to plan? What will you do when markets work against you? We know that over the long-term, high-quality growth assets (shares and property) increase in value, but having a plan in place that has a call to action in times of market volatility can separate the good strategies from the great.

A famous quote by one of the world’s most successful investors is at the heart of our rebalancing process at Hewison Private Wealth.

“Be fearful when others are greedy, and be greedy when others are fearful” – Warren Buffett.

As sharemarkets and property markets increase in value and investors become increasingly more confident, we identify that as a great opportunity to take some profits off the table and lock them away in defensive assets.

But every now and then we experience a major drawback in markets.  This happened as recently as March 2020 due to the Covid-19 pandemic. When fear was spreading across the globe, investors were spooked and started pulling money out of the sharemarket. We saw this as an amazing time to “be greedy when others are fearful” and we were able to use the protected profits to buy great quality companies off other investors at significant discounts. When the market recovered (quicker than expected), client portfolios recovered faster than the rest of the market as they had a higher number of shares/units to participate in the recovery. In a number of circumstances, we are already able to be taking profits again, not two years later.

If you chose to hold on, it is still a good strategy and better than selling out at a low point in the market – robbing yourself of the opportunity to recover. But taking action during the various market cycles can take your good strategy to great heights.

So again, what are you going to do next time your plan doesn’t go to plan? This is certainly where our experience and the true value of advice comes into play.