With its invasion of Ukraine, Russia has sent stock markets globally into freefall. Bond yields are collapsing as fast as the price of gold and other safe haven assets are rising. And no surprise, either: the invasion is arguably the biggest threat to European security since World War Two.
Advisers, however, are unanimously urging calm and for people not to make rash decisions on the back of today’s shock events.
Scott Gallacher, a chartered financial planner at Leicestershire-based independent financial advisers, Rowley Turton, says: “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. 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.”
It’s a sentiment echoed by Joshua Gerstler, chartered financial planner at Borehamwood-based The Orchard Practice: “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.”
Adrian Kidd, chartered wealth manager at Aylesbury-based EQ Financial Planning, also urged clients and investors more broadly to sit tight: “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.”
Kidd added that now may also be a time to commit extra capital into your mid- to long-term portfolio if you have sufficient cash put aside for emergency funds: “The mantra to buy on the dips holds true and we have just entered a potentially significant one.”
Indeed we have. A dark few weeks and even months lie ahead – in particular for the brave people of Ukraine whose lives and livelihoods are at risk.