Lessons of Lockdown

To continue our journey forward and avoid taking any steps backwards, it can be useful to look at key lessons we have learnt from our time in lockdown. We can look at how these may continue to be applied as we get used to life returning to a new sense of normal.

Lesson One: Have a plan

Life is full of surprises and especially in the last three months, we have learnt that an unprecedented event can happen at any time. While we cannot avoid these events from happening, we can prepare for the unknown. Creating a plan can involve many factors, such as designated savings accounts for emergencies and investment strategies to help us keep our cool during market volatility. Having a backup in place can only ever benefit you in the long run.

Lesson Two: Long term decisions need to be flexible

Life can change in an instant, that is always the way it has been. While making long term goals is great for keeping us accountable, we need to understand that final decisions regarding a long-term scenario may not always pan out the exact way we anticipate. The current pandemic has made us focus increasingly on the present and emphasises that the constant change in the environment makes it near impossible to stick to an exact play by play of a long-term situation. Maintaining flexibility allows for a less stressful transition through unforeseen circumstances.

Lesson Three: We cannot time markets

Many people have tried and ultimately failed at timing rises and falls in the market. Short-term decisions, especially in an environment such as the one we are experiencing currently, are risky to make. While we can not predict rises and falls, we can control our behaviour towards unexpected events and their impact on our investments. Investor reactions are a crucial factor when it comes to maintaining solid investment strategies.

Level Four: Decisions we make in periods of stress have a high impact on long-term results

At a time of market weakness, making alterations that make you feel more confident in the present can have negative implications in the long-term. Our reaction to Market falls and the temptation to fix major drops in our investments can be detrimental to our investment results in the future if the decisions are based on emotion and not well researched. 

Level Five: People want Instant.

Instant results and instant gratification from any decision is always extremely welcomed, however, most often we need to put in the hard work before we see the final reward. While instant results are often achievable, the long-term effects of rushed decisions create more problems in the future and offer less in the long run.