I have had two interesting cases to consider recently, both of which were with individuals who had been making their own investments decisions for some time and had faced a significant issue in terms of ‘what next?’.
One potential client came to see me last month. She was approaching retirement and had a significant sum invested in a combination of pensions and Isas to fund her income requirements when she stopped work. The issue was that she was literally 100 per cent invested in China and saw nothing wrong with this.
It transpired that about three years ago, she had read various headlines on the risk of investing in the usual asset classes and also about the continued health of China, so she invested all her assets (excluding her house) into this strategy. Despite planning to retire in a matter of months and wanting to take a guaranteed annuity at that time, she felt her strategy was low risk.
Potential client number two had been invested in equities and gold. He had read the headlines only a few months ago about the market falls and switched to cash as values decreased. Unfortunately for him, while markets then bounced back, he remained in cash and genuinely felt scared about what to do. The impact was that he had therefore crystallised his losses by selling in a falling market and had then stayed in cash to compound the problem.
There is no blame game here, but with the sheer volume of information now available online, the ability for amateur and professional investors to access the same details, but of course react to them in completely different ways, is something we need to be really aware of.
Philippa Gee is managing director at Philippa Gee Wealth Management