Daniel Arcadiou
Daniel Arcadiou

Principal Financial Adviser


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How to make the best financial decisions in difficult times 

Making financial decisions, particularly important, long-term decisions like buying a house, establishing an investment portfolio, or choosing the right time to retire, can be stressful at any time.

Add a crisis, like a global health pandemic, where most people face significant upheaval to employment, income and everyday life; and important financial decisions can become overwhelming.

It’s natural to want to avoid financial decisions when a crisis hits, but the fact is, the big events that prompt big financial decisions will continue. We must still decide what to do about the mortgage, how to carve out new career opportunities and how to manage our income and expenses. We still need decide when to retire, how to care for ageing loved ones, how to protect our wealth and leave a legacy for our children. Life goes on.

Good advice helps

That’s why having a strong relationship with an adviser is such an advantage at a time like this.

One of the less tangible benefits of the advice relationship is the ‘financial shorthand’ our clients share with a professional who understands their financial position, family, needs and goals.

Our clients have told us that this close advice relationship and the information we have been able to share about how we are managing their money has given them real peace of mind during the upheaval and uncertainty of the last few months.

When life is in flux it can be hard to focus on key aspects of financial management and split decision making into manageable tasks in line with your personal priorities and goals. While circumstances will be different for everyone, here are some things you can do to keep control of your financial situation.

Address cashflow concerns

Sudden changes to employment have caused immediate cashflow concerns in many families with mortgages or kids in private schools. Many families need two high-income earners to facilitate this lifestyle, so difficult decisions have to be made to adapt the family budget for new realities.

There has rightly been a lot of media coverage and concerns about the impact of the crisis on low income workers, but there is plenty of fallout among high-income earners too. Think of the pilots no longer flying, the boutique hotel owners with empty beds or the restaurateurs waiting to reopen to an uncertain future.

Even if your own circumstances have remained relatively stable during this time, it’s hard to watch the value of your hard-earned assets fall as housing and share markets react to the impacts of the crisis.

We can’t control the current volatility, but we can reconsider our financial priorities and reign in any unnecessary expenditure until more certainty emerges.

Lean on your adviser

The relationship you have with your FMD adviser can be of great value when it comes to making financial decisions in difficult times. It can:

  • Cut through the noise and provide clarity

Our qualified advisers are experienced in weighing up the pros and cons of financial decisions in an analytical way, based on rational data and circumstances. They can see your financial picture clearly and impartially at a time when you may not.

  • Help you visualise your decisions

Your adviser can model the financial outcomes of various scenarios to help you see the impact of your decisions.

  • Keep you agile and on track

They can also help you adapt and respond to changes in your financial circumstances and update your plan with new strategies to ensure you can still achieve your long-term goals.

Play the long game

Remember that achieving your financial goals is a long-term game. Sometimes you’ll feel great about where you’re at. Then there will be the inevitable setback or external shock that makes you feel like you’re going off-track. The power of a good financial plan is that you can keep coming back to your goals to stress-test your decisions.

If you want to earn the best retirement income, for example, it wouldn’t make sense to rush to cash after markets fall, even though playing it safe may feel right. The power of a good financial plan is that you can keep coming back to your goals to stress-test your decisions.

Markets had already reacted to this crisis by mid-March and the following weeks saw big rebounds. If you moved to cash in March, you’d have missed out on those rebound gains, and that cash – earning almost zero interest – wouldn’t support your goal to have the best retirement income.

This is where rational decision making is crucial and the right information from the FMD Investment Committee (IC) and the support of your adviser can help you stay on track.

Whatever financial challenges and opportunities you may face right now, if you’re having trouble seeing the forest for the trees, talk to your adviser who can provide the support and clarity you need to make the best financial decisions in difficult times.

Make strong financial decisions for your future

General advice disclaimer: This article has been prepared by FMD Financial and is intended to be a general overview of the subject matter. The information in this article is not intended to be comprehensive and should not be relied upon as such. In preparing this article we have not taken into account the individual objectives or circumstances of any person. Legal, financial and other professional advice should be sought prior to applying the information contained on this article to particular circumstances. FMD Financial, its officers and employees will not be liable for any loss or damage sustained by any person acting in reliance on the information contained on this article. FMD Group Pty Ltd ABN 99 103 115 591 trading as FMD Financial is a Corporate Authorised Representative of FMD Advisory Services Pty Ltd AFSL 232977. The FMD advisers are Authorised Representatives of FMD Advisory Services Pty Ltd AFSL 232977.