It’s no exaggeration to say that 2020 has been the most unusual year we have, or indeed will, ever live through. It’s been economically, mentally, and physically tough, not least because of the devastating effects of Covid-19 itself.
As we head towards 2021, and hopefully some more ‘normal’ times, here’s a look back at five lessons you can learn from this year’s events.
1. It’s important to be patient, and to focus on your long-term goals
One of the immediate consequences of the arrival of coronavirus was a fall in the value of stock markets around the world. As nations across the globe have entered a deep recession, the economic fallout is set to be felt for years to come.
It is therefore only normal that you may have been concerned about your pensions or investments this year. At its worst, the FTSE 100 had lost about 30% of its value, so naturally, you may have been worried.
It’s been important this year to remember that stock markets do experience short-term corrections. From the dotcom bubble to the global financial crisis, markets rise and fall but, over time, tend to generate positive returns.
2020 has taught us that it pays to be patient. Since the market fell in March, most global stock markets have recovered. Indeed, the Dow Jones broke the 30,000 barrier for the first time ever in November.
Had you been patient, and stayed invested, it’s likely that your portfolio would be approaching, if not already in, positive territory. As the old saying goes “it’s time in the markets, not timing the markets” that counts.
We’ve been here all year to provide reassurance, to remind you to focus on your long-term goals, and to help you to avoid knee-jerk reactions that might impact your plans.
2. Volatile times mean more scams, so it’s important to be vigilant
Fraudsters prey on uncertainty and so it was perhaps no surprise that 2020 saw an increase in the number of financial scams.
UK Finance reported almost 15,000 impersonation scam cases reported in the first half of 2020, up 84% compared to the same period last year, with £58 million lost to this type of fraud.
Pension and investment scams remain commonplace, so it’s important that you remain vigilant. Earlier this year we shared some useful tips on how to stay safe and it’s worth refreshing your memory on what to look out for.
3. Lockdown is hard, so we need to plan to avoid it in future
Being stuck at home as we have, and not being able to go out and do the things that we would normally do, could be everyone’s new reality without the right financial planning.
In 2020, you may have sampled what life is like when you’re unable to live normally. It may have become far easier to envisage what you, your partner, and your family’s life would look like if long-term disability, a serious illness, or the death of a loved one brought everything crashing down.
Also, if you want to maintain your lifestyle in retirement, it’s important to think carefully about whether you’re making adequate pension provision. If you don’t, your later years could see you reminiscing about the old times as you unwittingly recreate your lockdown experience.
4. It’s important to help good causes
With fundraising events cancelled and many people struggling financially, charities have suffered in 2020. On top of this, many charities have seen an increase in demand for their services, which has left them in a challenging position.
The efforts of the likes of Sir Tom Moore have shown us that supporting good causes is more important than ever. While not quite at Captain Tom’s level, we have proactively supported a range of charities during 2020.
Earlier in the year we shared details of the fabulous work of The Magpie Project, a fantastic charity providing practical support and advice to mothers with children under the age of five who are in temporary or insecure accommodation in London’s Forest Gate.
We were able to supply ten smartphones, which Hannah at The Magpie Project told us had made a huge difference to the mums they support.
In September we took our fundraising online, with the first Black Swan Charity Quiz. With prizes including a signed Crystal Palace football shirt, our team and clients raised more than £500 for 52 Lives, a charity designed to help someone in need every week of the year. Read more about how our work helped to support a teenager who really needed it.
Looking further afield, every year, in conjunction with our friends at NMG, we undertake a walk to raise money for charities that run several children’s orphanages in South Africa.
The charities work to support more than 250 at-risk children in the Johannesburg and Cape Town areas. Each orphanage runs a centre to house, feed, clothe, educate, and rehabilitate children who have been neglected, disabled, abused, orphaned or abandoned.
In August, our intrepid team headed to Stratford in London to participate in a charity walk around the Olympic Park, and on the various canal paths to Hackney Wick. Despite a torrential downpour, the team completed the route and have now walked more than 2,700 miles – about the distance from London to Tehran – and hope to raise at least £2,000 for this important cause.
5. Taxes are likely to rise, so it could pay to act sooner rather than later
With the Office for Budget Responsibility suggesting government borrowing will hit an eye-watering £394 billion in 2020, the Chancellor has some tough decisions ahead.
Rishi Sunak has already launched a review into potential Capital Gains Tax reform, but there could be other tax rises, from a hike in National Insurance contributions to changes to pensions tax relief, the introduction of new taxes to pay for social care or Inheritance Tax reforms.
On the 75th anniversary of VE Day, we looked at what the post-war years can tell us about what might happen to taxes and we’ve also looked at five ways the Chancellor might recoup some of the Covid-19 spend.
Get in touch
If it’s time for your financial review, or you want to explore how we can help you in this uncertain time, please get in touch. Email firstname.lastname@example.org or contact your adviser on 020 3828 8100.
The value of your investment 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.