What can we learn from the Covid-19 pandemic?
As we pass the various one-year anniversaries around the Covid-19 pandemic, there are some useful lessons to draw for your financial planning.
On the same day that Chancellor Rishi Sunak announced Covid-19 support measures in his first Budget, the World Health Organisation declared a pandemic. Since then, Mr Sunak has regularly returned to Parliament to announce further support schemes.
If you take a step back, the pandemic experience has offered some important financial lessons.
The value of an up-to-date will
Over half the adult population does not have a will, and Covid-19 had many scrambling to put something in place or make changes to an existing will that was no longer relevant. This urgency came at a time when there were many obstacles to writing or updating a will. These difficulties have since eased, but the importance of having an up-to-date will remains.
Both the UK and US stock markets fell by about one third between 19 February and 23 March 2020, the date the first UK lockdown started. Any investor who took fright on 23 March and sold up would have chosen the worst time to do so. More stoic investors were rewarded with a recovery. For example, from 23 March 2020 to the end of the year, the FTSE 100 rose by 24.5%.
Your retirement plans can shift
The pandemic has had a major impact on working patterns. Research by the Institute for Fiscal Studies revealed that many people have revised their retirement plans. As a response to the pandemic, one in eight workers aged 54 and over changed their planned retirement age, with most opting to retire later, not earlier.
The value of your investment and the income from it can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.
Investing in shares should be regarded as a long-term investment and should fit in with your overall attitude to risk and financial circumstances.
The Financial Conduct Authority does not regulate will writing and some forms of estate planning.