The difference between a fire and a fire drill

We’ve all been through countless amounts of fire drills. The fire alarm goes off, you get up, leaving your personal belongings behind and you walk to the designated area. But what happens in the case of an actual fire? You grab your laptop, iPad, phone etc, put on your coat and run out the door.

The same is true of investing. When providing investment advice, I use Finametrica‘s 45 years of data analysis to go through the potential downturns that they may be exposed to. It is carefully explained clients that there will be a fall in investment values and for those will long term to go to retirement, there will be 4 or 5 crashes (or possibly more!) before they retire. Depending on the asset mix of their portfolio, they are shown the biggest crashes that have happened in the past? Would they be ok if this happened to them? If not, we’ll change the strategy and take less risk.

Like the fire drill, it doesn’t mean anything. What do those past losses mean? When you don’t have any money in the game, they are just figures on a piece of paper. It is completely different when I am sitting down with you and telling  Now, I am sitting down with you and telling you that the €100,000 you invested 6 months ago is worth €94,000.

Do you grab your money and run? No, you have to remember that we talked about. This was always going to happen. In fact, we talked about how it could actually be worse and you said it was fine. Why? Because you didn’t invest your money for 5 weeks or 5 months, you invested it for 5 years or 30 years. The fact that the value of the stock you own doesn’t alter your plans one bit. We have on a strategy that will meet your goals but there will be ups and downs along the way.

We are having a little fire at the moment folks. It may get bigger or it may go out, we don’t know. Either way, there is no need to panic, just do what we have talked about already.

Are you worried about your investments? If so, you can contact me directly at and we can have a chat.