COVID-19, investing, and what next?

17 June 2020

Corona tempts the investor to make big mistakes, but also offers the investor opportunities.
In this blog we will discuss these issues.

Put money aside for later

You probably have a (financial) goal in your life. You may want to stop working earlier or help your children with the first purchase of their home. You will probably put money aside for that. However, saving alone is unlikely to achieve your goal. How is that possible? In addition to the low interest on savings, we are confronted with pressurized pensions, delayed State Pension and higher healthcare costs, which means that you are forced to build up extra capital yourself. Should you be concerned about this? No. Most of our customers have enough time to prepare for a good future.

What do you have to do to achieve your goals?

Who is able to determine this themselves and can successfully walk there is of course one of the lucky ones.
But many of us cannot or cannot do that well enough.
Just as for example for painting or plumbing work, it is often advisable to use a specialist.
My job as a financial advisor is to ensure that you live a good life now, but also in the future. That is why I am looking for an optimal way to build capital for those goals in the future. I often advise my clients to invest. Why? That is simple. Saving simply does not yield enough. And if you invest for the long term, the risk of investing is limited. You just have to take some risk to achieve your financial goals. A number of things are important to achieve your goal. For example, reducing risk by investing in a spread and periodic manner. But we are also critical of costs and the expectations we create. Sounds logical. However? And yet your emotions can get in the way of reaching your goal.


Your emotion. By not making rational decisions, you cannot achieve your goal. This therefore mainly occurs with investors who do not receive guidance from an adviser. They act out of fear or false optimism. As a result, they make serious investment mistakes.
Below I will outline such an emotional cycle for you so that you know what to look out for.
Your investment account has been opened. The stock market is rising …
You see the stock market rise, so you are quickly enthusiastic: “Wow this is not so strange!” A brief moment of euphoria follows and you decide to invest more than is wise. You buy at the peak of the stock market, if the investments are more expensive.

But every increase has a…

Drop. That is how it always goes on the stock exchange. It has peaks and troughs. And so after the moment of euphoria, the stock market drops slightly and a feeling of concern and denial arises: “It looks less rosy, but the stock market will probably not go down …”
Unfortunately. The stock market drops even further. Slowly your emotion turns into despair and with a further decline you become desperate: “I should have gotten out earlier!”
Then there is a complete depression and the biggest investment mistake is made: “Selling. As quickly as possible!” You sell all your investments to the point that they are worth the least …

You can’t resist

After the sale, at the low point with maximum loss as a result, something else interesting happens. You will keep following the fair secretly. Just like a winter sports enthusiast who checks after his holiday whether there is good snow. No sense, because you no longer go on winter sports. So why watch?
You will see the stock market rise and get hope. And after a further rise, once you have regained enough confidence in the stock market, you decide to start investing again. And that at the peak of the stock market, when the investments are more expensive again. And so the cycle starts all over again.

How can these wrong decisions be prevented?

Here my added value comes into play. With professional guidance you achieve between 3 and 4 percent more return (you can google these studies yourself).
I help you make the right choices, but I am also there to set the right expectations. If you are going to invest, you have to take into account very large peaks and troughs in the short term. But in the long run, you will be rewarded for taking risks.
My compensation is a kind of insurance premium. I assure you against your own emotional decisions. Why? Because I want you to live a nice life later, without worrying about money.

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